[Click eStock] "Kangwon Land, Earnings Improvement Expected with 'With Corona'"

Kiwoom Securities Report

[Asia Economy Reporter Minji Lee] Kiwoom Securities maintained its buy rating and target price of 38,000 KRW for Kangwon Land on the 15th. This is based on the expectation of improved profitability due to the introduction of the 'With Corona' policy in the fourth quarter.

The expected sales for the third quarter are 243.1 billion KRW, and operating profit is 18.6 billion KRW, representing a 217% growth compared to the same period last year, with a turnaround to profitability anticipated. Although nationwide social distancing measures were expanded to level 4, Jeongseon, Gangwon Province, where Kangwon Land is located, was subject to level 2 social distancing under the mandatory quarantine management for multi-use facilities. This relaxed policy application is cited as the main factor for the improved performance.

By segment, the casino is expected to record 215 billion KRW and the non-casino 28.2 billion KRW, increasing by 265% and 59% respectively compared to the same period last year. Detailed casino data estimates a drop amount of 900 billion KRW and 2.678 million visitors, showing growth of 248% and 568% year-on-year, continuing the recovery trend. Namsoo Lee, a researcher at Kiwoom Securities, stated, “This situation is expected to continue in the fourth quarter,” adding, “With the increase in family travelers during summer vacations and the Chuseok holiday, the strong performance of non-casino sectors such as hotels and condos will accompany this, initiating a virtuous cycle between casino and non-casino sectors.”

Kangwon Land Casino, which belongs to the third group subject to mandatory quarantine management for multi-use facilities, faces operational restrictions after 10 PM under level 4 social distancing, and visitor variability increases to 50% capacity under level 1 social distancing. Currently, Jeongseon County in Gangwon Province is under level 2 social distancing and is likely to be subject to a lower standard upon the introduction of the With Corona policy. Daily sales, which averaged 2 billion KRW in the second quarter, are expected to increase to 2.38 billion KRW in the third quarter due to the summer peak season effect and the application of revised social distancing levels. In the fourth quarter, another momentum for visitor improvement is expected after mid-November, anticipating a rapid recovery in casino performance.

Kangwon Land’s total sales for this year are expected to reach 814.6 billion KRW, rising to 53% of the 2019 level. Operating losses are expected to continue following last year but are estimated to significantly decrease from 430 billion KRW to 25 billion KRW. Researcher Namsoo Lee said, “A stepwise improvement trend like this is expected next year as well, and recovery to pre-COVID-19 performance levels is anticipated in the second half of the year.”

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