DAOL Investment & Securities evaluated that meaningful revenue growth is expected while reviewing the transition of Kangwon Land's visitor management system from a daily system to a total hourly system. However, the target stock price is 21,000 won, and the investment opinion remains "buy."
Kim Hye-young, a researcher at DAOL Investment & Securities, analyzed, "Kangwon Land's first-quarter revenue and operating profit are expected to meet market expectations," adding, "The increase in VIP visitors and drop amount (the amount exchanged by visitors for chips) is positive."
Kangwon Land's first-quarter consolidated revenue is expected to be 376.2 billion won, a 2.1% increase year-on-year, while operating profit is projected to be 77.5 billion won, a 2.2% growth. The market's consensus expectation for Kangwon Land's performance was revenue of 370 billion won and operating profit of 74.5 billion won.
By business segment, revenue from the casino is expected to be 322 billion won, as the enhanced VIP services are likely to increase the drop amount compared to the same period last year. Hotel revenue is estimated to be 27.4 billion won. Considering that the first and second quarters are typically off-peak seasons, revenue may rise further in the third and fourth quarters.
The outlook is positive. Kangwon Land is expected to receive an allocation of 1.5 trillion to 1.6 trillion won in the total revenue system this year, having ranked first with an S grade in last year's assessment of the normalization of the gambling industry. The total revenue system aims to limit revenue across domestic gambling industries to prevent excessive competition by setting a total revenue amount, which is then distributed among business sites.
The visitor limit is currently being reviewed for transition from a daily system that restricts visits to 15 times per month to a total hourly system based on entry times. There are also moves to ease the drop amount limit for domestic visitors.
The researcher noted, "As we eradicate illegal gambling and expand legal channels, we can expect meaningful revenue growth."