Earnings Outlook 'Soaring'... Casino Stocks Stretching Out in Earnest

[Image source=Yonhap News]

[Asia Economy Reporter Lee Jung-yoon] As COVID-19 restrictions ease and air routes gradually reopen following the endemic phase (periodic outbreaks of infectious diseases), the outlook for casino stocks is bright. Although the domestic stock market remains sluggish due to prolonged stagnation, analysts expect the recovery in earnings to continue.

According to the Korea Exchange on the 13th, Paradise closed at 15,000 KRW, down 0.33% from the previous day. GKL showed a similar stock price trend, closing at 15,000 KRW, down 0.66%. With the prolonged market downturn, the decline compared to early last month was 6.54% and 5.06%, respectively.

Despite the weak stock prices, the outlook for casino stocks is positive due to a marked increase in sales. According to the Financial Supervisory Service’s electronic disclosure system, Paradise’s provisional casino sales for September this year amounted to 39.171 billion KRW, a 312.9% increase compared to the same period last year. The cumulative casino sales from January to September this year reached 217.453 billion KRW, up 15.3%.

GKL’s performance also saw a significant increase. The provisional casino sales for September alone were 171.65 billion KRW, up 10.7% from the previous month and 169.2% compared to the same period last year.

Researcher Ji In-hae from Shinhan Investment Corp explained, "Contrary to low expectations, foreign casinos’ third-quarter earnings this year are expected to be quite favorable. Since April, the easing of social distancing measures and the resumption of overseas marketing from May have combined to create a healthy virtuous cycle of visitor recovery, increased drop amounts, normalization of hold rates, and sales growth." The drop amount refers to the total amount of chips purchased by visitors to play games at the casino, and the hold rate is the percentage of the drop amount that the casino wins from the games.

The bright outlook for casino stocks is due to the gradual reopening of air routes. Unlike the travel industry, which requires increased demand from the general public, casinos rely on a small number of VIP customers, so even if air routes are not fully reopened immediately, sales growth can be expected. Additionally, the Japanese government has reinstated visa-free entry for 68 countries and regions, including Korea. It is anticipated that travel between Korea and Japan, as well as from Japan to Korea, will increase. With airlines expanding China-Korea routes, the recovery trend of casino stocks is expected to be further strengthened.

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