Grand Korea profit to grow 10% next year

The state-controlled company expects net income of us$ 96 million next year, Chief Executive Officer Oh-Nam Kwon said in an interview in Singapore. “We hope to have over 120 million visitors” from a forecast 100 million for 2009.

Grand Korea, whose shares have gained 54 % in two weeks from the initial public offering price, operates three of 16 casinos that cater to foreigners in Asia’s fourth-largest economy. While US operators such as Las Vegas Sands Corp. and MGM Mirage open new casinos, Grand Korea needs to raise revenue at existing facilities because of government restrictions.

“Japanese tourists with fat purses from a stronger yen will come to Korea,” Kim Chang Kwean, an analyst at Daewoo Securities Co. who recommends buying Grand Korea’s shares, said in an interview yesterday. The casino operator’s target “is easily achievable” Kim said. “A potential visa waiver between Korea and China may also be a boon to this company.”

Grand Korea rose 2 % to close at us$ 16,04 in Seoul trading. The casino operator first started trading Nov. 19 after the Korea Tourism Organization sold a 30 % stake at us$ 10.43 a share. Kangwon Land Inc., operator of South Korean only casino open to locals, rose 1.8 % to us$ 14.51 and has climbed 22 % this year. “To expand, we have to get licenses from the government, and the government has no plan to issue licenses to new casinos,” Kwon said.

Las Vegas Sands, controlled by billionaire Sheldon Adelson, and its Macau unit have raised about us$ 4.85 billion in debt and equity financing, partly to restart construction at a 1.2 million sqm casino resort in the former Portuguese colony. MGM Mirage, the Las Vegas Strip’s biggest casino owner, opened its us$ 8.5 billion CityCenter resort on December 1.

South Korea will pursue a plan to waive visa requirements for visitors between the nation and China to boost tourism, according to a statement on November 20 on the Web site of South Korea’s presidential office.

The number of tourists going to South Korea for medical purposes may reach 70,000 next year, Kwon said. That would be 40 % more than the number of medical tourists the country’s health ministry estimates for 2009. Patients from overseas countries between May and July rose about 34 % from the same period a year earlier, the ministry said in September, citing a sample survey of 11 medical institutions.

South Korea’s government said in October 2008 that it aims to sell 49 % of Grand Korea by 2010 as part of efforts to privatize state-owned companies. “Additional, gradual” stake sales may be determined after reviewing company ownership and operations, it said at the time, without giving details.

Korea Tourism may sell a further 19 % in the casino operator by late next year, at levels close to the IPO price of us$ 10,43. The government agency will decide whether it will sell more shares in 2012, he said.

Grand Korea’s three casinos have a 48 % market share of those catering to foreigners, Kwon said. Of the 17 casino operators in South Korea, Kangwon Land is the only one that caters to both locals and foreigners.