[Click eStock] "Kangwon Land, Q1 Earnings Shock Due to Temporary Reflection of 'Mine Closure Fund'"

[Asia Economy Reporter Oh Ju-yeon] Meritz Securities evaluated that the earnings shock of Kangwon Land in the first quarter was due to the preemptive reflection of the mine closure fund, which is under dispute with Gangwon Province, and excluding this, the performance was satisfactory.

According to the Financial Supervisory Service's electronic disclosure system on the 13th, Kangwon Land reported a consolidated operating loss of 186.8 billion KRW in the first quarter of this year, turning to a deficit compared to the same period last year. Sales amounted to 236 billion KRW, down 37.5% year-on-year, and net loss was 156.1 billion KRW, also turning to a deficit.

The number of operating days per quarter, which was about 90 days, was reduced to 53 days due to the casino shutdown caused by the COVID-19 pandemic, and the decrease in casino sales corresponded to the reduction in operating days.

Researcher Lee Hyo-jin analyzed, "Casino sales were at the expected level, but operating profit was sluggish because the additional mine closure fund (188.7 billion KRW) announced on the 11th was retroactively applied to the estimated amount for 2019 and reflected in the first quarter."

Lee added, "This amount, similar to past labor-related lawsuits, was preemptively reflected in the first quarter according to conservative accounting principles, and refunds are possible depending on the court's decision. The related cost has not been paid and was only recorded as unpaid expenses (liabilities) as an accounting cost in the first quarter."

He mentioned that some of Kangwon Land's facilities have recently reopened, and rapid sales recovery is expected thereafter.

Lee explained, "Since the 8th, some operating areas such as VIP tables have been in operation, and although it is only the first week after opening, sales have recovered to 70-80% compared to the same period last year. This is why we believe sales recovery will be rapid once fully opened."

Meritz Securities forecasted that Kangwon Land's operating profit will turn to a loss of 8.3 billion KRW this year, assuming that casino facilities will remain closed until the end of May.

Along with this, Lee emphasized, "Although it is difficult to make a judgment at this point before half the year has passed, considering the abundant cash holdings and that Kangwon Land's dividends are a major source of funds for the largest shareholder, the justification for dividend payments is higher."

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