[Edaily Reporter Park Soon-yeop] Analysts suggest that investors should once again turn their attention to casino stocks, which have been left behind in the stock market rally centered on the artificial intelligence (AI) value chain. The assessment is that the recovery in experiential consumption among China’s high-income earners, coupled with an increase in inbound tourism to Korea, could lead to continued earnings growth for the domestic foreigner-only casino sector.
Hwang Ji-won, an analyst at iM Securities, issued an “Overweight” investment recommendation for the casino sector in a report published on the 10th. “In the transition from rising asset prices to consumption, experiential consumption—such as travel, casinos, and concerts—is the sector that benefits the fastest,” Hwang said. “At this juncture, where the structural recovery of Macau’s gross gaming revenue (GGR) is converging with a surge in inbound tourism to Korea, a selective approach to domestic foreigner-only casinos is necessary.”

iM Securities views the Macau casino market as a leading indicator for domestic casino stocks. The firm explains that since the core customer base for both Macau and South Korea’s foreigner-only casinos consists of Chinese VIPs and premium mass customers, changes in the gambling spending psychology and disposable income of China’s high-income class simultaneously affect both markets. Macau’s cumulative GGR for the first five months of this year reached 108.4 billion Macau patacas, an 11% increase year-over-year.
However, Macau casino stock prices are undergoing a downgrade due to external factors such as cost burdens, concerns over growth slowdown, China’s economic slowdown, and U.S.-China tensions. Analyst Hwang judged that if the decline in Macau stock prices is more due to cost and sentiment issues than a deterioration in fundamentals, the accompanying correction in domestic casino stocks could actually present a buying opportunity. This is because domestic foreigner-only casinos face lower regulatory and cost structure risks than Macau, and the recovery of inbound Chinese tourism is still in its early stages.
Changes in China’s consumption structure were also cited as a favorable factor for the casino sector. The analysis suggests that while the wealth effect driven by China’s real estate market has weakened, the wealth effect from the rising stock market is leading to increased consumption among some high-income groups. Analyst Hwang noted that China’s consumption recovery is likely to center on high-income groups, such as VIPs and premium mass market customers, rather than spreading across society as a whole, and viewed this structure as more conducive to experiential consumption—such as casinos, travel, and leisure—than to everyday necessities.
The recovery of inbound tourism to Korea is another key driver. According to the report, the cumulative number of foreign tourists visiting Korea through April this year reached 6.77 million, a 22% increase year-over-year, marking an all-time high. By region, Chinese tourists increased by 28% to 2 million, while Japanese tourists rose by 20% to 1.24 million. iM Securities cited several factors driving the expansion of inbound tourism in the second half of the year, including spillover benefits from the Korea-Japan travel ban lifting, expectations for the extension of group visa-free travel and the introduction of mutual visa-free travel for individual travelers, increased air supply, and a preference for short-haul travel due to high exchange rates and fuel prices.
Foreign casino performance has already entered a recovery phase. The number of foreign casino visitors in Korea reached approximately 3.5 million, surpassing 2019 levels, and the combined revenue of the three foreign casino operators last year was 2.2 trillion won, a 15% increase from the previous year. Operating profit rose 65% to 351.8 billion won, confirming an operating leverage effect where profit growth outpaced revenue growth.
iM Securities described the differentiation strategy of Korean casinos as a “structure that treats Macau’s mass market customers as VIPs in Korea.” The analysis suggests that by leveraging geographical accessibility and a segmented membership system, they provide VIP-level psychological satisfaction even to premium mass market customers, while expanding visitor appeal through packages combining K-content, medical services, shopping, and tourism.
By stock, the firm named #Lotte Tour Development as its top pick. The firm expects strong operating leverage effects following the conclusion of the Dream Tower investment cycle. Furthermore, with Greater China customers accounting for over 90% of its clientele and a market share of approximately 80% in Jeju’s foreigner-only casino market, the company is expected to benefit directly from the recovery of Chinese inbound tourism. While a high debt burden remains, the report also noted the potential for reduced financial costs through refinancing in the second half of the year.
#Paradise was identified as the second-choice stock. The firm assessed that the company has secured the potential to attract premium mass-market customers and grow drop volume through room expansion resulting from the acquisition of the Grand Hyatt. Amid robust VIP demand from Japan, intensified marketing efforts in China during the second half of the year and expectations for mutual visa-free travel between South Korea and China were cited as additional growth drivers. However, the burden of fixed costs and financial expenses resulting from the development of a luxury hotel in Jangchung-dong and expanded additional investments was identified as a variable affecting short-term profitability.
Analyst Hwang stated, “The current 12-month forward price-to-earnings ratio (PER) for foreign casino stocks is approximately 12 times, which is similar to the level in Macau.” He added, “Considering that both Paradise and Macau traded at around 20 times in 2016, when expectations for integrated resort growth were reflected, there is room for further upside.” He added, “The recent simultaneous correction in Korean casino stocks should be viewed as a buying opportunity from a medium- to long-term perspective.”