Kangwon sales to grow as jab rate ups, GKL slower: analyst

Sep 17, 2021 Newsdesk Latest News, Rest of Asia, Top of the deck  

---

Kangwon Land Inc, the only South Korean casino operator permitted to offer gambling to locals, is likely to post consolidated sales up 256 percent year-on-year for the third quarter. That is according to analyst Hazell Lee, of South Korean brokerage NH Investment and Securities Co Ltd, in an article published on Thursday in the digital English-language version of Business Korea.

In another piece of Ms Lee’s research published on the same day on the financial news outlet, she suggested Grand Korea Leisure Co Ltd (GKL) would see its consolidated third-quarter sales be flat, judged year-on-year. GKL is an operator in that country of foreigner-only casinos under the Seven Luck brand.

Inbound travel to South Korea by foreigners has been subject to restrictions during the Covid-19 pandemic, in common with the general policies applied in a number of Asia-Pacific countries and regions.

At Kangwon Land Inc, which runs a casino resort of the same name in a remote upland area outside the capital, Seoul, the forecast of NH Investment is for consolidated sales for the three months to September 30 to be KRW272.5 billion (US$232.8 million).

The brokerage said the “rosy outlook” was due to an “improving operating environment and expectations for sound earnings at the non-casino division in line with peak seasonality”.

Kangwon Land Inc’s “top-line growth should stand out” once South Korea transitions to “a period of coexistence with coronavirus, in line with higher vaccination rates,” wrote Ms Lee.

The analyst stated that currently the maximum number of people that could be inside Kangwon Land’s casino at the same time was limited to 1,800, meaning 30 percent of normal capacity. Despite the limitation, the average total number of daily visitors “has already returned to the pre-pandemic daily visitor number, i.e.,8,000 persons,” she added.

Ms Lee said discussions were “under way” in South Korea, to make a transition to a “period of coexistence with coronavirus” starting “in November”, amid rising vaccination rates.

As a result, “additional easing in casino operations restrictions look likely”, she suggested.

The analyst also noted that under “recently-modified” social distancing rules, casinos would enjoy additional leeway in terms of Covid-19-related compulsory closures, even if the pandemic alert level rises.

Grand Korea Leisure is a subsidiary of the Korea Tourism Organization, which in turn is affiliated to South Korea’s Ministry of Culture, Sports and Tourism.

“Given its nature as a public company, it is difficult for GKL to improve its cost efficiency,” wrote Ms Lee.

A sales rebound via improved customer accessibility for the foreigner-only casino business was “the only way” that the firm could achieve earnings “normalisation”.

“Although a recovery is likely thanks to rising global vaccination rates, the firm has to weather out its current circumstances,” the analyst wrote.

NH Investment estimates Grand Korea Leisure’s third-quarter consolidated sales will be down 0.4 percent year-on-year, at KRW34.6 billion.

Grand Korea Leisure reported casino sales of just above KRW8.80 billion in August, up 16.3 percent month-on-month. Such sales however fell by 31.0 percent from the nearly KRW12.76 billion achieved a year ago.

It runs three foreigner-only casinos in South Korea under the Seven Luck brand: two in the capital Seoul, and one in the southern port city of Busan.

In August, the South Korean government announced Kangwon Land Inc’s gaming licence was being extended for 20 years, to 2045.

---

---