South Korean casino operator Grand Korea Leisure (GKL) has spent most of 2017 getting beat up by Chinese politicians and domestic competitors.
GKL’s second quarter earnings report was released this week, and it made for grim reading. Revenue in the three months ending June 30 was down 15% to KRW 109.7b (US $97.2m), operating income fell nearly 44% to KRW 17.6b and net income sank nearly 40% to KRW 15.4b.
GKL’s downward trajectory mirrors its Q1 figures, which saw net income fall over one-third. For the year to date, GKL’s revenue is down 11.5% while profits are 37% lower than at the same point last year. Despite the fiscal carnage, GKL announced it would issue an interim dividend this month of KRW 130 per share, for a total payout of KRW 8b.
Like most Korean casino operators, GKL, which operates three foreigner-only Seven Luck gaming venues – two in Seoul and one in Busan – has been battered by Beijing’s decision earlier this year to restrict Chinese group tours to Korea to protest the deployment of a US missile system on Korean soil.
GKL saw its share of foreign tourists dip nearly one-third in Q2, while the number of Chinese tourists crossing its casinos’ thresholds fell nearly two-thirds year-on-year.
Overall table game spending was down only 4.7% in Q2 but the VIP segment fell 6.5% while mass market table drop was essentially flat. Compounding matters, table game hold was down 1.3 points to 11.4%. Of GKL’s three casinos, only the Busan operation reported a rise in casino spending during Q2.
The decline at the Seoul properties could have something to do with the April opening of Paradise Sega Sammy’s Paradise City, the country’s first large-scale integrated resort. Paradise City is near Seoul’s primary international airport and serves as a bright shiny lure for gamblers jetting in from overseas. Analysts expect Paradise City to continue to act as a drag on GKL’s activity at least through the rest of 2017.
