[Click eStock] "Kangwon Land, Regulatory Relaxation Effects to be Reflected from Q3"

KB Securities Report

[Asia Economy Reporter Minji Lee] KB Securities maintained a buy rating and a target price of 33,000 KRW for Kangwon Land on the 28th.

For the second quarter on a consolidated basis, sales are estimated at 287.5 billion KRW and operating profit at 56.4 billion KRW, representing increases of 41.2% and 1987.6% respectively compared to the same period last year. Operating profit is expected to slightly miss the market consensus of 62.9 billion KRW. KB Securities analyst Seonhwa Lee stated, "Although social distancing was fully lifted on April 18, the simultaneous occupancy limit and side betting regulations were only fully lifted from May 16, so the sales recovery due to regulatory easing is expected to be fully reflected from the third quarter."

Since the full lifting of social distancing on April 18, operating hours have returned to 20 hours and the simultaneous occupancy limit has been removed. Side betting has also been permitted, freeing the casino from regulations. Accordingly, average daily traffic is showing a recovery trend, estimated to have increased from 1,938 people in January last year to 5,830 in the second quarter. However, it has not yet recovered to pre-COVID-19 levels (7,300 people in the second quarter of 2019).

Analyst Seonhwa Lee said, "The main causes are the spread of monkeypox and demand diversion to online casinos," adding, "A full recovery in traffic is expected from the peak season in the third quarter." The increase in drop amount is more pronounced than the increase in traffic. It is understood that the drop amount per person has increased due to inelastic demand for the casino.

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