Daiwa predicts new momentum
Phase I of the new Paradise City casino resort, which opened in South Korea on April 20, may be a formidable rival to another resort in the market, Grand Korea Leisure Co. Ltd.
In a recent note, JP Morgan analyst Thomas Kwon wrote that GKL will “face tough competition in luring regional gamers as Paradise City in Korea ramps up operations in 2017.”
Paradise City was developed by South Korea’s foreigner-only casino operator Paradise Co. Ltd. and Japanese pachinko operator Sega Sammy Holdings Inc., according to GGRAsia. It is located near Incheon International Airport, which has been called the gateway to the capital city of Seoul. In its first 100 days, the property had about 310,000 visitors, local media reports.
JP Morgan also listed the “stronger-than-expected pressure” from Paradise City as a potentially negative for GKL for 2017.
Analysts DS Kim and Sean Zhuang said GKL’s third-quarter trends “appear solid,” but warned, “This quarter-on-quarter momentum would merely be an ‘optical’ recovery from a very bad second quarter,” in which the operator recorded “weak casino drop,” down 5.6 percent from the prior-year period due to “a decline in visitor traffic, casino table drop and hold ratio,” said Kwon.
“GKL saw lower casino traffic in the second quarter, especially from Japan VIP gamers and China casual gamers,” he added. GKL operates three casinos—two in Seoul and one in Busan. All cater to foreigners only.
Kwon added that Daiwa expects GKL to “regain its casino-sale growth momentum from the second half of 2017 by diversifying its visitor mix and pursuing a disciplined cost strategy” as well as trying to draw more premium-mass customers from Japan and elsewhere in Asia.
