Paradise, Reopening Expectations Rise

[Asia Economy Reporter Jang Hyowon] Despite Paradise, which operates hotels and casinos, continuing to post losses in the fourth quarter of last year, an analysis suggests a positive outlook as reopening expectations are gradually being reflected.

According to the industry on the 19th, Paradise's consolidated sales for the fourth quarter of last year recorded 111.5 billion KRW, a 7.1% increase compared to the same period last year. Operating loss continued at 20.4 billion KRW. The operating loss was significantly below the market forecast of an 8.5 billion KRW loss.

The earnings shock is analyzed to be due to one-time costs from voluntary retirement and performance bonuses at Paradise Segasami and Hotel Busan. Additionally, non-operating expenses occurred due to impairment losses on casino operating rights.

Restructuring such as voluntary retirement was also carried out in January, with restructuring costs expected to be reflected at 13 billion KRW. However, it is projected that future labor costs will decrease, allowing the break-even point (BEP) to be exceeded even if casino sales remain at the current level of the low 20 billion KRW per month.

Hwang Hyunjun, a researcher at DB Financial Investment, said, “From the second quarter, performance is expected to improve as non-casino sales recovery based on domestic demand and labor cost reduction effects take full effect,” adding, “Also, as reopening expectations rise, it will be positive for investment sentiment and fundamental improvements.”

Furthermore, Lee Seonhwa, a researcher at KB Securities, explained, “Due to restrictions on overseas travel caused by COVID-19, demand for domestic hotels has increased, and the ADR (Average Daily Rate) is gradually improving, which is also positive.”

However, Lee pointed out that uncertainty remains regarding the recovery of Chinese VIP gaming demand. He added, “The draft amendment to the Macau casino law is more favorable than the market expected, and Paradise has a high proportion of Japanese VIPs, which is an advantage as it has built resilience to cope with the gap in Chinese VIPs.”

This content was produced with the assistance of AI translation services.