The earnings of Paradise, South Korea’s foreign-only casino operator, are expected to achieve a “record quarter” in the three months to June 30, JPMorgan Securities (Asia Pacific) said.
“We expect Q2 to be our best-ever earnings/profit quarter,” analysts DS Kim and Mufan Shi wrote in a note on Thursday.
Operating profit for the second quarter “may be greater than operating profit for the whole of 2019,” according to the brokerage firm.
The agency estimates Paradise’s second-quarter operating profit of about 52 billion won to 59 billion won ($46.8 million) for the full year of 2019 before the start of the COVID-19 pandemic.
Paradise’s January-March 2023 operating profit reached 19.02 billion won and sales reached 191.52 billion won, while its shareholders’ net profit for the first quarter was 6.99 billion won.
In a note on Thursday, JPMorgan said it expected Paradise to post revenue of about 280.2 billion won in the April-June period, with net profit of about 33 billion won.
Analysts at the agency said it was “difficult” to analyze the pace of recovery as reopening was very “ununiform” for foreigners in Paradise Co’s three key source markets – South Korea, Japan and China – while airlift capabilities were not yet fully normalised.
They added: “But even skeptics (including our old selves) would agree that pent-up demand here is very real, growing surprisingly quickly above 100% of pre-COVID levels, similar to what we’ve seen in other markets (Las Vegas, Singapore, Macau or even the Philippines).”
“The only sector that hasn’t fully recovered is China VIP, which hasn’t stopped us from posting record sales in June and the second quarter of 2023,” the JP Morgan team said.
Paradise Corp’s casino sales rose 39.5% month-on-month to about 95.59 billion won in June.
According to the broker, the casino company “reduced its employee numbers by about 20% during the downturn, many of which were relatively high-paying senior positions.”
“Staff costs are a single maximum cost item comprising more than 40% of Paradise’s pre-COVID cash operating expenditure (tax excluded), and we expect the group’s overall operating expenditure to be more than 15% below pre-COVID levels,” Kim and Shi said.
They added: “Paradise has not operated very efficiently in the past (compared to casinos in other jurisdictions), so this headcount reduction will be a significant revenue driver.”
Paradise’s earnings before interest, taxation, depreciation, amortisation (EBITDA) and operating profit margins could almost double/tripling to about 25% and 15% in fiscal year 2023, respectively, according to JPMorgan estimates.
BY: 홀짝게임