GGRAsia – South Korea’s Paradise posts 36 pct drop in 2Q profit

South Korea’s Paradise posts 36 pct drop in 2Q profit

Aug 08, 2014 Newsdesk Latest News, Rest of Asia, Top of the deck

Chinese VIP players brought big money to South Korean casino operator Paradise Co Ltd in the second quarter of 2014, but it was not enough to offset a 35.9 percent drop in profit in the period.

Paradise reported net profit of KRW23.9 billion (US$23.1 million) in the three months to June 30, down from KRW37.3 billion a year earlier. Revenue in the second quarter increased by 12.4 percent year-on-year to KRW172.5 billion, Paradise said in a filing on Friday. Growth was mostly supported by casino revenue, which grew by 16 percent year-on-year to KRW148.8 billion.

Operating profit however went down 25.7 percent to KRW29.5 billion in the April to June period.

Paradise currently runs five foreigners-only casinos in South Korea, namely in Seoul, Incheon, Busan and Jeju.

The company said in its second quarter earnings statement that its casino drop increased by 16.8 percent from a year earlier to KRW1.7 trillion, largely thanks to the contribution of Chinese high rollers.

Chinese VIP players accounted for 66.1 percent of table drop at Paradise casinos during the second quarter of the year, according to Friday’s statement.

Paradise in July said it would withdraw from a proposed deal to acquire a controlling stake in hotel company Parnas Hotel Co. The casino firm said it would focus on the development of its new “Paradise City” resort, 40 kilometres (25 miles) west of Seoul.

The US$1.7-billion scheme, due to break ground in October, will include hotels and restaurants, and a foreigners-only casino. The project, due to open in 2017, is a joint venture with Japan’s Sega Sammy Holdings Inc, the holding company of Sammy Corp, a pachislot and pachinko machine manufacturer, and Sega Corp, a video games maker.

South Korean casinos currently only permit foreigners to gamble, except at Kangwon Land, a difficult-to-access location 150 kilometres southeast of Seoul in Kangwon province.

Paradise is banking on South Korea’s proximity to northeast China to woo more Chinese VIP gamblers with its new integrated resort. “There will be more rich people in China, and they will need to travel,” Choi Jong-hwan, chief executive of Paradise Sega Sammy Co, told Reuters this week in an interview. “This is a megatrend,” he added.