Gangwon Land, Temporary Closure Impact Makes Revenue Decline Inevitable... Q3 Expected for Business Normalization

[Asia Economy Reporter Park Jihwan] Kiwoom Securities stated on the 18th that the temporary closure of Kangwon Land due to the novel coronavirus infection (COVID-19) may last longer than expected, and business normalization is expected to occur in the third quarter. Accordingly, the investment opinion 'Buy' is maintained, but the target stock price has been lowered by 15% from 36,500 KRW to 31,000 KRW.

Researcher Lee Namsu of Kiwoom Securities said, "Kangwon Land's casino and non-casino sales are expected to be 212.3 billion KRW, down 43.7% compared to the same period last year, slightly below market expectations," and added, "Considering 38 closure days in the first quarter, a decrease in drop amount, visitors, and hold rate is expected, leading to a decline in operating profit."

Lee estimated, "The average daily sales decrease during the closure period is estimated at 380 million KRW for the casino and 50 million KRW for the non-casino," and analyzed, "A total sales decrease of 163.8 billion KRW combining casino and non-casino sales seems unavoidable."

He explained, "Kangwon Land has over 51% of its shares held by the public sector, so the degree of compliance with government policies is inevitably higher than that of foreign casinos," and added, "The casino is expected to reopen in line with the lifting of social distancing measures."

However, he predicted that the average daily number of visitors after reopening could increase from the current 8,300. He forecasted, "If the cooling-off period in March and April, when access was difficult, is utilized as a cooling time under the cooling-off system, a rapid recovery in demand is expected."

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