GGRAsia – S.Korea’s Paradise Co 3Q rev up 12pct, profit down 56pct

S.Korea’s Paradise Co 3Q rev up 12pct, profit down 56pct

Nov 07, 2017 Newsdesk Latest News, Rest of Asia, Top of the deck

South Korean casino operator Paradise Co Ltd on Tuesday reported a net profit of approximately KRW4.23 billion (US$3.8 million) for the three months ended September 30, a decrease of 56.1 percent on the KRW9.63-billion net profit recorded in the prior-year period.

Paradise Co, which runs foreigner-only casinos, reported operating income of KRW10.15 billion for the third quarter of 2017, compared to operating income of approximately KRW10.93 billion a year earlier.

The casino firm said total revenue from sales increased by 11.9 percent year-on-year, to about KRW196.09 billion in the third quarter. Judged sequentially, sales were up 40.2 percent, the firm said. Expenses for the period – excluding costs of sales – increased by 29.8 percent in year-on-year terms, to KRW22.34 billion.

The company reported casino sales of KRW155.57 billion for the three months to September 30, an increase of 5.3 percent from a year earlier and 35.4 percent sequentially.

Paradise Co said casino sales were up due to “recovery in Chinese VIP [play] and solid growth from Japanese VIP [play]”.

During the first half of 2017, Paradise Co recorded a sequential decline in the number of Chinese VIP customers. Industry analysts have suggested that general Chinese tourism to South Korea had been negatively affected during that period by a diplomatic spat between South Korea and China. The row was sparked by the siting on South Korean soil of a U.S.-supplied missile system – known as Terminal High Altitude Area Defense (THAAD) – designed to counter North Korea’s ballistic missile programme. The first parts of the system were deployed from early March onward.

Paradise Co reported table drop of KRW1.41 trillion for the third quarter, compared to KRW1.17 trillion in the prior-year period. Chinese VIP patrons to the firm’s casinos accounted for 35.5 percent of the total table drop in the July to September period, according to Tuesday’s statement. In the third quarter of 2016, Chinese VIPs had accounted for 44.2 percent of the total table drop in that period.

Paradise Co’s latest casino operating figures were based on the results of four venues it runs, namely: Walkerhill in Seoul; Jeju Grand on Jeju Island; Busan Casino in the southern port city of Busan; and Paradise City (pictured), in Incheon, near the main international airport serving the country’s capital Seoul. The first phase of Paradise City – a venture between Paradise Co and Japanese pachinko operator Sega Sammy Holdings Inc – opened on April 20.

The firm said in its latest filing that the casino at Paradise City has posted “robust growth” since its opening. The property, it added, reached its operating break-even point in the third quarter, recording “strong casino [revenue] growth from non-Chinese VIPs” – namely those from Japan – and good casino revenue growth in the mass-market segment.

Paradise City recorded casino sales of KRW55.54 billion in the third quarter of 2017, compared to KRW35.04 billion in the preceding quarter.

Analysts DS Kim and Sean Zhuang of JP Morgan Securities (Asia Pacific) Ltd said in a Tuesday note following Paradise Co’s third-quarter numbers: “[Casino table] drop recovered a strong 20 percent year-on-year and 26 percent quarter-on-quarter, as Paradise City accelerated its [table drop] ramp-up (+42 percent quarter-on-quarter) and the cannibalisation impact has subsided…”

They added, commenting on the group performance as whole: “There was faster-than-expected recovery in gaming demand, particularly from Chinese VIP (which is very difficult to predict).”

(Updated at 8.50am, Nov 8)