GGRAsia – S.Korea’s GKL reports 38 pct jump in 2Q profit

S.Korea’s GKL reports 38 pct jump in 2Q profit

Aug 08, 2016 Newsdesk Latest News, Rest of Asia, Top of the deck

South Korean casino operator Grand Korea Leisure Co Ltd (GKL) reported a 38.1 percent year-on-year increase in net income for the second quarter of 2016, to KRW25.60 billion (US$23.1 million).

Revenue for the period was up 5.4 percent from the prior-year period, to KRW128.95 billion, the firm said in a filing to the Korea Exchange on Friday. Revenue however was down 5.6 percent sequentially.

Operating income for the three months to June 30 stood at KRW31.39 billion, a 44.8 percent increase from the prior-year period, the firm said.

Analyst Thomas Kwon of Daiwa Securities Group Inc said GKL’s operating income benefited from a low-base comparison from a year earlier.

The summer of 2015 was a poor period performance-wise for South Korean casinos. It coincided with what analysts have said was a significant and sudden decline in inbound tourism to the country, in the wake of an outbreak there of a disease called Middle East Respiratory Syndrome, known as MERS

Commenting on the results, Mr Kwon said: “The company saw a fall in casino drop, weak VIP gamer traffic in the region … and a rise in labour costs. However, operating margin improved to 24.3 percent for the second quarter of 2016, from 17.7 percent for the second quarter of 2015, due to the absence of one-off labour costs.”

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.

Also on Friday, GKL announced an interim dividend of KRW130 per share, amounting to a payout of KRW8.04 billion.

Daiwa’s Mr Kwon quoted GKL’s management saying it expected a stable growth in casino revenues in the second half of 2016, “on growing mass-table gamers and casual game players”.

“Management noted the casino operator plans to have tighter control on its marketing and other operating costs to improve its earnings visibility for the second half of 2016 and onwards,” he added.

Rival foreigner-only casino operator Paradise Co Ltd said last week that its net profit for the second quarter more than doubled to KRW25.5 billion. 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.