Kangwon Land off to a strong start in 2016: Daiwa

Mar 18, 2016 Newsdesk Latest News, Rest of Asia, Top of the deck  

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Kangwon Land Inc, the operator of the only casino resort in South Korea where the country’s nationals are allowed to gamble, has seen strong business growth in the first two months of 2016, said Daiwa Securities Group Inc analyst Thomas Y. Kwon in a note on Thursday.

Kangwon Land’s casino services “are likely to show strong business growth in the first quarter of 2016,” Mr Kwon said after a conference call with the casino firm’s management.

“Management noted that the casino resort saw stable growth in the average utilisation rate of all its casino tables (around 81 percent) while it seeks ways to meet the robust casino-gaming demand at weekends,” said Mr Kwon.

According to Daiwa’s note, Kangwon Land plans to hire more dealers and casino staff throughout 2016.

“Over the medium term, management expects multi-year earnings growth, mainly on the increase of casual gamers, and the opening of the second Yeongdong highway in late 2016 and its water theme park in summer-2018,” added the note.

Kangwon Land operates a casino resort (pictured) located in an upland area of Kangwon province, 150 kilometres (93 miles) from the country’s capital Seoul.

The firm is ramping up the completion of a theme park, targeting a soft opening in the fourth quarter of 2017 and a grand opening in the summer of 2018, said the Daiwa analyst.

Kangwon Land in July 2014 broke ground on an expansion project that will include a water-based theme park. At the time, the project had a price tag of KRW167.2 billion (US$144 million).

Mr Kwon said: “With other attractions like ski slopes and golf courses, it expects to attract more [of the] casual gamers to the resort and increase the revenue from its mass-table games and slot machines, which accounted for 79.2 percent of its total revenue in 2015.”

For full year 2015, Kangwon Land reported revenue of KRW1.63 trillion, up by 9.2 percent from the previous year. Net income for the full year increased by 22.9 percent year-on-year to KRW441.6 billion, the casino firm said in a filing in February.

Daiwa forecasts Kangwon Land’s first quarter revenue and operating profit to rise by 9.2 percent year-on-year to KRW464 billion and by 8.3 percent year-on-year to KRW183 billion, respectively.

Mr Kwon said the brokerage expects “strong earnings growth momentum for 2016,” but adds that risks to Kangwon Land’s results include “delay in the addition of new casino tables and a sharp rise in operating costs due to business growth initiatives”.

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