Mass tables up 4.4 percent
South Korean casino operator Kangwon Land Inc. has reported a profit of KRW63.75 billion (US$55.6 million) for the final quarter of 2016, down 31.4 percent year-on-year, reports GGRAsia.
A note from Daiwa Securities Group Inc. attributes the disappointing results to “a fall in VIP gamer traffic, higher labor costs and donations and one-off impairment losses.”
The decline in profit was due to “on one-off costs from bonus payments to employees and impairment losses from Kangwon Land’s subsidiaries for the amusement park and game business,” said Daiwa analyst Thomas Y. Kwon.
Revenue for the quarter that ended December 31 rose 1 percent from the prior-year period to almost KRW410.03 billion, the result of “soft casino revenues from VIP (-4.5 percent year-on-year) and slot machines (+0.2 percent year-on-year), and weak visitor traffic (-0.5 percent year-on-year),” Kwon wrote.
“In fourth quarter 2016, revenues from mass-table games and non-casino services rose 4.4 percent year-on-year and 1.4 percent year-on-year, respectively, on solid seasonal growth in visitors and casual gamers to the casino resort,” he said.
South Korea has 17 casinos, but locals are only allowed to gamble at Kangwon Land casino resort in a remote area of Kangwon Province.
Daiwa said Kangwon Land “remains confident of delivering solid earnings growth for 2017-2018, on the back of robust monetization on casual gamers, a gradual rise in the table-utilization rate, and tight cost controls.” The brokerage said it expects Kangwon Land to “streamline its casino operation and non-core businesses to cope with a tough business environment.”
Daiwa also cut its estimates for the operator’s earnings-per-share “to factor in the weaker-than-expected second half 2016 results, higher labor costs, and expectations of a rise in non-operating expenses from the non-profitable subsidiaries.”
