Kangwon Land 2015 casino sales to rise 11 pct: Daiwa

Mar 26, 2015 Newsdesk Latest News, Rest of Asia, Top of the deck  

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Kangwon Land (pictured), the only casino resort in South Korea open to local players, could see its revenue and its operating profit for 2015 rise by roughly 11 percent in each case, says a note from Daiwa Securities Group Inc.

Foreign investors interested in the South Korean market are keen to see the whole market opened up to locals in order to drive revenues and profits. There are currently 16 foreigners-only venues in the country.

Daiwa analyst Thomas Kwon wrote regarding Kangwon Land’s 2015 prospects: “We forecast the company’s revenue to rise by 11.4 percent year-on-year to KRW416 billion [US$375.4 million] and its operating profit by 10.8 percent year-on-year to KRW152.5 billion, helped by effective control of selling, general and administrative costs and the absence of one-off costs.”

Last year revenue in South Korea’s foreigners-only casinos rose a more modest 0.3 percent to KRW1.36 trillion, the country’s Yonhap news agency reported last week.

Mr Kwon’s note said the brokerage expected Kangwon Land’s visitor numbers in 2015 to rise by fewer than 1 percent to 3.03 million, from approximately 3.01 million in 2014. It said some of the expected improvement in profit was likely to come via more efficient operations and shift in games mix, as well as more “casual gamers with a relatively high hold ratio”.

Daiwa said that as well as improving operational efficiency, Kangwon Land – which is state-owned – was also looking to diversify further its offer.

“We learned that the company’s top management is eager to focus on three strategic areas in 2015: an eco-resort for all family members, transparent corporate governance, and cost efficiency in all business divisions. The company has promoted internal managers to the management team to run the casino resort more efficiently, and continues to comply with the overall cost guidelines from the central government,” the Daiwa analyst said.

Yonhap – quoting government figures – had said total gaming revenue generated by Kangwon Land in 2014 rose 10 percent on-year to KRW1.4 trillion. Daiwa gave the change as 11 percent.

Daiwa quoted Kangwon Land’s chief executive Seung-heui Ham as saying the resort planned to open a water-based theme park in June 2017.

The property – located in Kangwon province, 150 kilometres (93 miles) southeast of South Korea’s capital Seoul – reported in February that its fourth quarter 2014 net profit had risen by nearly 70 percent, to KRW47.4 billion.

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