Korea’s Paradise Co 3Q profit dips 15 pct

Nov 03, 2016 Newsdesk Latest News, Rest of Asia, Top of the deck  

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Profit at South Korean casino operator Paradise Co Ltd fell 14.8 percent year-on-year in the third quarter, the firm said in a filing to the Korea Exchange on Thursday.

Such profit was approximately KRW10.46 billion (US$9.2 million), compared to KRW12.26 billion in the prior-year period.

Paradise Co operates four venues, all foreigner-only casinos, namely: Walkerhill in Seoul; Incheon Casino at Incheon; Jeju Grand on Jeju Island; and Busan Casino in the southern port city of Busan.

The group said in a presentation on its results, published on its website, that third-quarter 2016 labour costs had been pushed up by a KRW12.8-billion “early retirement” expense.

Aggregate sales revenue group wide for the three months to September 30 increased by 22.7 percent year-on-year, to KRW175.21 billion.

Casino sales – which accounted for 84.3 percent of group sales for the third quarter – rose 25.8 percent year-on-year, to KRW147.77 billion. Cost of all third-quarter sales rose by 2.1 percentage points to 83.9 percent, judged year-on-year, to KRW147.06 billion.

Paradise Co’s operating profit margin for the third quarter fell 1.8 percentage points, to 6.2 percent.

Accounts receivable for the nine months to September 30 stood at nearly KRW18.68 billion. For full-year 2015, accounts receivable amounted to KRW24.43 billion.

The firm noted that the rise in group-wide sales for the three months to September 30, had been “supported by the low base effect created by the MERS outbreak in 2015”. That was a reference to a public health emergency in the country in 2015 due to an outbreak of Middle East Respiratory Syndrome, which severely dented inbound tourism to South Korea.

In third-quarter 2016, “soft drop” – the amount of money manually recorded by a dealer or a pit boss as being exchanged for chips during table games – was nearly KRW1.30 trillion for the Paradise Co group, compared to KRW1.14 trillion in the prior-year quarter.

Chinese VIPs

In the latest reporting period, Chinese VIPs as a group was the largest contributor to Paradise Co’s soft drop. They provided KRW633 billion – or 48.8 percent – of soft drop. A further KRW334 billion – or 25.8 percent – came from Japanese VIPs; KRW165 billion via VIPs originating from other places; and KRW164 billion from mass-market players.

In the third quarter 2015, Chinese VIPs had contributed KRW586 billion – or 51.5 percent – of soft drop, and Japanese players KRW268 billion, or 23.6 percent.

The stock of Paradise Co – and that of Grand Korea Leisure Co Ltd, a rival in South Korea’s foreigner-only casino sector – saw some volatility last week amid media reports that the authorities in China might curb the level of outbound tourism to South Korea.

On Thursday Paradise Co also gave an update on its October casino revenue, reporting an 18.4 percent year-on-year decline.

Such revenue was nearly KRW54.81 billion, compared to KRW67.13 billion in the prior-year period.

The decline was due to deterioration in table game revenue, which slipped 19.6 percent year-on-year, to KRW51.48 billion. Machine game revenue actually rose 6.9 percent year on-year in October, to KRW3.33 billion.

Judged month-on-month, the group’s October 2016 casino revenue rose 34.4 percent.

The latest monthly revenue figures means that for the 10 months to October 31, aggregate casino revenue for the group was KRW507.40 billion, an increase of 6.2 percent judged year-on-year, mostly due to a 7.0 percent growth in table game revenue. Machine game revenue fell 5.4 percent year-on-year in the first 10 months of the calendar year.

In October 2016, Paradise Co’s table drop – the amount of cash exchanged for chips by customers at the table – was almost flat year-on-year, declining by 0.6 percent to approximately KRW441.32 billion. Judged month-on-month however, such table drop rose 13.3 percent.

For the first 10 months of 2016, table drop rose 1.8 percent year-on-year, to approximately KRW4.04 trillion.

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