Casino Suppression Demand Expected to Ease with COVID-19 Relief, Gangwon Land Stock Price 'Soars'

[Asia Economy Reporter Oh Ju-yeon] Among the casino industry, Gangwon Land's stock price recovery is drawing attention for being the fastest. Among casino companies, Gangwon Land, which targets domestic customers, plans to resume operations on the 20th after extending its temporary closure period twice due to the 'social distancing' measures caused by the novel coronavirus infection (COVID-19). The securities industry analyzes that it will have the highest demand accessibility after COVID-19 and that the stock price will recover rapidly.

According to the Korea Exchange on the 14th, Gangwon Land's stock price, which was 18,450 won on the 1st, rose 26.8% to 23,400 won as of the closing price on the 13th. On the same day, as of 10 a.m., it was traded at 23,450 won, up 0.21% from the previous trading day.

During the same period, GKL and Paradise, which target foreign tourists, rose 13.0% and 9.5%, respectively, significantly lagging behind Gangwon Land's stock price increase rate.

Experts analyze that the relatively strong stock price increase rate of Gangwon Land is because, in the short term, pent-up demand for casinos is expected to be strong when domestic COVID-19 eases, and in the mid-to-long term, dividend attractiveness and the possibility of easing business regulations remain.

NH Investment & Securities predicted in a report on the day that Gangwon Land is irreplaceable as a domestic casino monopoly operator with high customer loyalty due to the nature of the industry, and considering the significantly reduced possibility of customer outflow overseas due to COVID-19-related international travel restrictions, pent-up demand will be strong when operations resume.

Meritz Securities also expected that Gangwon Land's sales could recover flexibly after reopening due to the industry's characteristic of demand exceeding supply. Accordingly, it maintained a target price of 30,000 won.

Researcher Lee Hyo-jin of Meritz Securities said, "The fact that the domestic situation has stabilized the fastest worldwide raises expectations for reopening," adding, "The domestic situation is the only variable, and as it is a demand-exceeding industry, sales can recover quickly upon reopening."

The increased dividend attractiveness due to the stock price decline is also cited as an investment point.

Cape Investment & Securities calculated this year's dividend per share (DPS) as 900 won, considering Gangwon Land's average DPS over the past five years, and Meritz Securities also saw a high possibility that the DPS would be maintained at 900 won, considering that government-affiliated institutions are the largest shareholders of Gangwon Land. This corresponds to a yield in the high 3% range based on the current stock price. NH Investment & Securities took a more conservative estimate of 800 won.

Researcher Lee Hwa-jung of NH Investment & Securities diagnosed, "Gangwon Land is actively paying dividends as part of its shareholder-friendly policy," adding, "Since the dividend amount is based on the five-year average net profit, although net profit is expected to decrease by 30% this year, the DPS decrease is limited to the 10% range, so the dividend yield attractiveness remains valid."

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