South Korean casino operator Grand Korea Leisure Co Ltd (GKL) reported a 16.5 percent decline in net income for the first quarter of 2016, to KRW26.85 billion (US$23.1 million). Revenue for the period was down 8.1 percent year-on-year to KRW136.62 billion, the firm said in a filing to the Korea Exchange on Tuesday.
“Consolidated operating income came in at KRW42 billion, meaningfully better than our and consensus estimates of KRW28 billion to KRW34 billion,” investment bank Morgan Stanley commented.
“Although the declining trend of the total [table] drop amount continued, the beat was largely attributable to a higher hold rate,” analysts Jiana Seo, Sam Min and Praveen Choudhary wrote.
GKL – a subsidiary of the Korea Tourism Organization, which is an affiliated body of South Korea’s Ministry of Culture, Sports and Tourism – operates three foreigner-only casinos in South Korea under the Seven Luck brand.
Rival foreigner-only casino operator Paradise Co Ltd reported this week a decline of 62.1 percent year-on-year in net profit for the first quarter. Paradise Co currently operates a network of five foreigner-only casinos located in three major cities in South Korea and on the country’s holiday island of Jeju.
Morgan Stanley’s note on GKL said that the number of Chinese VIP players at the firm’s casinos during the first three months of 2016 fell 38 percent year-on-year and 7 percent quarter-on-quarter. Chinese high rollers are one of the main sources of revenue for South Korea’s foreigner-only casino sector.
“The number of Japanese and other VIP trends [at GKL] were rather disappointing, tracking +2 percent year-on-year and -13 percent year-on-year, respectively,” wrote Morgan Stanley.
South Korea currently has 17 casinos, but the country’s nationals are only allowed to gamble at one of them – Kangwon Land in an upland area of Kangwon province. Its operator last week reported net income of KRW142.81 billion for the first quarter of 2016, up by 7.9 percent from the prior-year period.
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