Casino operator Paradise Co Ltd saw its net profit shrink in the third quarter of 2014 even as sales went up. The South Korean firm reported net profit of KRW25.6 billion (US$23.5 million) for the three months ended September 30, down by 7.6 percent from a year earlier.
Revenue in the third quarter increased by 5.1 percent year-on-year to KRW172.6 billion, Paradise said in a filing on Thursday. Growth was mostly supported by casino revenue, which grew by 7.1 percent year-on-year to KRW139.9 billion.
Operating profit however went down by 15.4 percent to KRW29 billion in the July to September period.
Paradise currently runs five foreigners-only casinos in South Korea: one in the capital Seoul; one in Incheon near the capital’s international airport; one in the southern city of Busan and two on the island of Jeju.
Chinese VIP players accounted for 66.1 percent of table drop at Paradise casinos during the third quarter of the year, the firm said in Thursday’s filing.
South Korean casinos currently only permit foreigners to gamble, except at Kangwon Land, a difficult-to-access location 150 kilometres (93 miles) southeast of Seoul in Kangwon province.
Paradise had a share of 49.6 percent of the South Korean market based on casino sales in the third quarter, according to data from the Korean Casino Association cited in the filing. That is up from 46 percent a year earlier, but down from a 54.9-percent share in the previous quarter.
The firm expects to break ground on its Incheon project next month, according to a note from investment bank Daiwa Capital Markets. Paradise is partnering with Japan’s Sega Sammy Holdings Inc for a US$1.7-billion scheme at Yeongjong Island. The development, called Paradise City, is scheduled to open in 2017.
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”We expect Goa to quickly become a US$1 billion market as it transitions to land-based casinos (from US$150 million today), which is still just a fraction of India’s total GGR potential of US$10 billion to US$17 billion”
Analyst at Union Gaming Securities Asia