S.Korea’s Paradise Co profit more than doubles in 2Q

Aug 05, 2016 Newsdesk Latest News, Rest of Asia, Top of the deck  

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South Korean casino operator Paradise Co Ltd on Thursday reported net income attributable to shareholders of approximately KRW25.5 billion (US$22.9 million) for the three months ended June 30, up by 135.8 percent from a year earlier.

Judged sequentially, second quarter profit rose 74.6 percent from the KRW14.6 billion achieved in the first quarter.

Operating income for the second quarter more than doubled from a year earlier to nearly KRW32.8 billion, the firm said in a filing to the Korea Exchange.

The casino operator said total revenue increased by 32.2 percent year-on-year in the second quarter to about KRW189 billion, from approximately KRW143 billion in the prior-year quarter. The result was a 20.4 percent improvement from the first quarter.

The company reported casino sales of KRW166.7 billion for the three months to June 30, up by 35.9 percent from a year earlier.

“Paradise reported robust second quarter 2016 results on solid traffic growth from non-Chinese gamers, strong drop growth at its casinos at Walkerhill and Busan, a higher hold ratio, and a disciplined cost strategy,” said Daiwa Securities Group Inc analyst Thomas Y. Kwon in a note on Thursday.

“We think the casino operator has successfully integrated its casinos and streamlined its casino operation and marketing channels amid a tough business environment,” added Mr Kwon.

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.

The firm said in a statement that the growth in casino sales was supported by a “high hold ratio”. The operating margin improved to 17.3 percent in the second quarter “due to low burden of fixed costs” for the casino division, it added.

The company last month said its casino sales had nearly doubled in June. It reported casino sales of KRW46.1 billion for the month of June, up by 99.2 percent from the prior-year period.

The firm reported table drop of KRW1.32 trillion for the second quarter. Chinese VIP patrons to Paradise Co’s casinos accounted for 54 percent of the total table drop in the period, according to Thursday’s statement.

Paradise Co had a share of 49.4 percent of the South Korean casino gambling market based on casino sales at the end of June, according to data from the Korean Casino Association cited by the company.

In Thursday’s note, Daiwa’s Mr Kwon said Paradise Co’s management had mentioned that its casinos were “well optimised to benefit from the increasing [number of] casino visitors from the East Asia region, following capacity expansion at Busan and Walkerhill and at [South] Korea’s first integrated resort (Paradise City)”.

Paradise Co is constructing the foreigner-only casino resort Paradise City, in Incheon, near the main international airport serving the country’s capital Seoul. The scheme broke ground in 2014 and is schedule to open in April 2017. Paradise City is a joint venture project between Paradise Co and Japanese pachinko operator Sega Sammy Holdings Inc.

In a separate filing also on Thursday, Paradise Co announced that in July its casino sales grew by 45.3 percent year-on-year, to KRW49.2 billion.

Table game sales accounted for nearly 93 percent of the group’s total casino sales in July, at approximately KRW45.7 billion, up by 48.5 percent year-on-year. Gaming machine sales reached KRW3.5 billion, up by 12.6 percent from the prior-year period.

The numbers are for gaming sales at Paradise Co’s casino division, comprising the properties at: Walkerhill, in Seoul; Jeju Grand on Jeju Island; Incheon, near Incheon International Airport; and Busan Casino.

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