- This is an in-depth report on Paradise and the Korean gaming industry (Part 1). The earnings of Paradise Co Ltd (034230 KS), the largest foreigners-only casinos company in Korea, are currently in the pits. However, Paradise Co Ltd (034230 KS) shares are up 33% YTD, outperforming other major casino stocks such as Las Vegas Sands Corp (LVS US) which is up 19% YTD and Genting Malaysia Bhd (GENM MK) which is up 24% YTD. Other major Asian casino stocks that have performed better than Paradise include companies such as Wynn Macau Ltd (1128 HK) which is up 45% YTD.
- The key difference between these three companies and Paradise is the fact that Wynn Macau, LVS, and Genting Malaysia are all have been generating solid growth of sales and profits backed up by higher visitors and drop figures. On the other hand, Paradise's recent quarterly data indicates a decline in sales and a turn to operating losses. Nonetheless, stock prices trade on expectations and many investors expect Paradise's operations to turn around in the 2H 2017.
- Paradise could not have timed the opening of its mega integrated resort/casino at the worst time possible (April 2017), when the Chinese government put a ban on group tours to South Korea in March 2017. Despite this atrocious timing and terrible earnings in 1H17, Paradise has been one of the best performing gaming stocks in Asia. Paradise is a play on the eventual political reconciliation between China and South Korea.
This insight is part of Smartkarma. For more follow this link.