[Click eStock] "Kangwon Land, Historic Low... Buying Opportunity"

[Asia Economy Reporter Ji Yeon-jin] Shinhan Financial Investment stated on the 6th that the corporate value of Kangwon Land is at a historic low, and the stock price adjustment due to administrative sanctions related to illegal foreign entry is a buying opportunity. They also maintained a buy investment opinion and a target price of 33,000 KRW.

Kangwon Land is considered a representative defensive stock in the entertainment and leisure sector. While the KOSPI index fell by 26% compared to the beginning of the year in the first half of this year, Kangwon Land's stock price remained flat. However, in the second half, it was excluded from the rebound seen in foreign casinos due to the easing of social distancing and the resumption of overseas VIP marketing, as well as in travel and airline sectors due to the activation of inbound and outbound tourism.

In particular, news on the 25th of last month that the Ministry of Culture, Sports and Tourism would impose administrative sanctions on Kangwon Land for neglecting illegal foreign entry significantly pulled down the stock price.

However, the administrative sanctions are expected not to significantly impact Kangwon Land's performance. Ji In-hae, a researcher at Shinhan Investment Corp, said, "The proportion of foreigners at Kangwon Land is only 1.2%, and if Kangwon Land stops, Jeongseon in Gangwon Province would come to a complete halt, so it is unlikely to reach a business suspension sanction," adding, "In the worst case, even a 15-day business suspension would have a limited negative impact."

In the event of a business suspension, sales are expected to be around 57 billion KRW, and losses around 15 billion KRW, which corresponds to about 3-5% of the annual operating profit.

Researcher Ji explained, "The estimated losses due to the sanction order have already been reflected in the market capitalization, and excluding this issue, Kangwon Land's clear and trend-based performance momentum after the second quarter and the dividend momentum to resume after two years are still valid."

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