Leisure Goods & Services Korea Gaming - COVID-19 uncertainty

As of Q120, Chinese & Japanese visitors accounted for over 70% of Korea's foreigner-only casinos’ business. With Japan's state of emergency, travel to Korea will likely be impacted.

20 Apr 2020

Chinese consumers' plans after COVID-19 is controlled

Source: UBS Evidence Lab, UBS Estimates

Data from UBS Evidence Lab's Consumer Pulse survey in China suggests overseas travel is ranked lowest among things to do until after COVID-19 is controlled.

Material impact of COVID-19: casino closures may last till end of June

We reduce our 2020 Korea gross gaming revenue (GGR) estimates materially (by around 33%) to factor in the negative impact from COVID-19 and announced closures of most casinos. We expect most announced shutdowns (domestic since 23 February; foreigner-only [FO] since 24 March) to last until end-June, implying GGR contribution of close to zero for Q220. However, we expect a faster recovery for the domestic market upon reopening, given the potential prolonged impact of travel demand regionally. We forecast FO/domestic GGR to decline year over year by 29%/33% before recovering by around 25% year over year combined in 2021E; this assumes that GGR returns to around 80%/93% of 2019 GGR levels by 2021.

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