Kangwon Land’s 1Q net profit up on lower casino sales
Kangwon Land Inc, the operator of the only casino resort in South Korea where the country’s nationals are allowed to gamble, says its first-quarter net profit rose by 13.3 percent from the prior-year period, despite a slight decline in gaming revenue.
Such profit in the three months to March 31 was KRW102.4 billion (US$86.5 million), compared with nearly KRW90.4 billion in the same period last year, according to a Thursday filing to the Korean Exchange. The firm said its first-quarter net profit grew by by 437.8 percent when compared to KRW19 billion in the fourth quarter last year.
Operating income for the first quarter this year fell slightly by 0.7 percent year-on-year to approximately KRW125.1 billion, said Kangwon Land.
South Korea currently has close to 20 casinos, but the country’s nationals are only allowed to gamble at Kangwon Land casino resort (pictured) in an upland area of Kangwon province – 150 kilometres (93 miles) from the country’s capital Seoul.
The casino operator reported sales of nearly KRW377.45 billion for the first three months of 2019, down 0.3 percent from a year earlier. That included gross gaming revenue of KRW329 billion, a decline of 1.2 percent from the prior-year quarter.
The company reported a slight year-on-year decline in the mass-market gaming segment, but an increase in sales in its so-called “Membership Club” segment.
According to a separate presentation filed on Thursday, Kangwon Land’s sales in the mass table segment decreased by 0.4 percent year-on-year to KRW163.9 billion in the first quarter, while sales from slot machines fell by 5.6 percent to KRW137 billion. Revenue from the membership club segment amounted to KRW61.2 billion in the period, up by 12.7 percent when compared to a year ago.
Kangwon Land’s first-quarter non-gaming revenue increased by 6.4 percent year-on-year to KRW48.4 billion.
The cost of sales for the company in the reporting period amounted to KRW180.6 billion, up by 5.1 percent year-on-year.
The company did not give commentary on the quarterly results filed with the Korea Exchange, nor in a separate presentation published on its corporate website.
Kangwon Land however noted that the aggregate number of customers to its casino resort in the reporting period increased by 2.1 percent year-on-year, to 745,566.
The company is – as the only authorised provider of casino gaming to South Korean nationals – subject to significant oversight from the country’s government.
But analysts DS Kim and Christopher Tang of JP Morgan Securities (Asia Pacific) Ltd said in a Thursday note following the first-quarter numbers, that an announcement – now expected in May – from South Korea’s National Gambling Control Commission – on a likely cap for financial year 2019 on Kangwon Land’s gross gaming revenue (GGR) was likely to be a “non-event”.
“Kangwon’s GGR is highly unlikely to… reach revenue cap levels in any scenario,” the analysts stated.
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