Paradise City, which is set to open in April, will fuel South Korean casino operator Paradise Co. Ltd.’s revenue in 2017, according to Seoul-based brokerage Shinhan Investment Corp.
In a note it issued on Thursday, Shinhan predicted that Paradise Co.’s revenue may grow by as much 35.3 percent this year. Analyst June-won Sung’s optimism on Paradise Co. is driven by the opening of Paradise City slated in April.
“Paradise Co as a whole is forecast to post sales of KRW938.6 billion [US$805.3 million] in 2017,” Shinhan, a subsidiary of Shinhan Financial Group Co Ltd that provides security brokerage and investment banking services in South Korea, said.
Paradise Co., the country’s largest foreigners-only casino operator, has swung back to profitability last year after it hit KRW 603.1b (US $509m) in the 12 months ending December 31, 2016. The figure is 6.2% higher than 2015’s total, which was down 14.7% from 2014.
With the launch of South Korea’s first major integrated resort near Incheon’s international airport in the second quarter of 2017, Sung expects Paradise Co to notch “total operating profit of KRW54.3 billion (-24.3 percent year-on-year) and net profit of KRW23.1 billion (-64.6 percent year-on-year) in 2017.”
He said the profit forecasts already included depreciation costs, interest and other expenses related to Paradise City.
“The share price [of Paradise Co] is projected to climb further if monthly earnings of the new casino resort come in line with the consensus after the opening. Costs may become an issue… if sales fall short of expectations,” he said.
The rise and fall of Paradise City, which is a co-venture with Japanese pachinko operator Sega Sammy Holdings, depends on how many Chinese gamblers the property can attract. Paradise Co. had earlier said that the company would establish a “massive’ junket operation to ensure a steady stream of Chinese high rollers crossed the casino’s threshold.
It also admits that it would take a decade or more before Paradise City turned a profit.