South Korea’s leading foreigner-only casino operator, Paradise Co, enjoyed a record-breaking quarter in the three months to 30 September 2023, setting all-time highs in group-wide revenues, EBITDA and operating profit. The company’s Incheon integrated resort, a joint venture with Japan’s Sega Sammy Holdings, also saw EBITDA and operating profit set new records thanks to the proliferation of Japanese VIPs.
According to Paradise Co’s 3Q23 financials, group revenues climbed by 50.7% year-on-year and 3.7% quarter-on-quarter to KRW285.6 billion (US$217 million). Although casino sales fell by 13.8% sequentially to KRW115.8 billion (US$88.1 million), hotel sales climbed by 7.6% to KRW30.9 billion (US$23.5 million) and integrated resort sales by 21.3% to KRW132.7 billion (US$101 million).
As a result, operating profit increased by 49.0% year-on-year and 4.1% quarter-on-quarter to KRW79.2 billion (US$60.3 million), while EBITDA was up 24.9% and 2.8% respectively to KRW77.1 billion (US$58.7 million).
At Paradise City, of which Paradise Co owns 55%, sales of KRW132.7 billion (US$101 million) included casino sales of KRW97.8 billion (US$97.8 million), up 19.0% over the June quarter, with turnover from Japanese VIPs reaching 149% of pre-COVID levels. Chinese VIPs are still back to just 68% of pre-COVID.
In a note, JP Morgan analysts DS Kim, Mufah Shi and Selina Li observed that the company’s Q3 results had comfortably beaten consensus, maintaining its Overweight rating on Paradise shares.
“GGR has fully recovered to pre-COVID levels, thanks to solid performance across segments,” the analysts wrote.
“Japanese VIPs (45% of total drop) and mass demand (20% of drop) continued to climb to hit 125% and 115% of pre-COVID levels, respectively, and Chinese VIPs (15% of drop) started to rebound (albeit from a low base) to reach 66% recovery rate vs 42% in 2Q.”
Paradise Co noted that visa-free entry for visitors from Japan had resumed from October 2022 and group tours from China as of August 2023.
