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Kangwon Land to underperform in 16Q4: analysts

Korea’s only casino allowing for local entry, Kangwon Land, is likely to have underperformed in 16Q4 and will continue to do so in 2017, say Korean analysts.

Shinyoung Securities, which was quoted by the Korea Times on Monday reportedly cut its target price for the casino to KRW 45,000 (US$39.1) from KRW 50,000.

While the performance of the casino improved since its expansion in 2013, “the effects has started to diminish,” noted analyst Han Seung-ho.

"The ongoing political turmoil also has not helped the company bolster its sales,” he added.

The firm estimates operating profit to be approximately KRW 127.4 billion in 16Q4, down 6.7 from market consensus. Sales are estimated to be KRW 420 billion, 3.4 percent lower than market consensus.

Han also warned the casino operator won’t be meeting market expectations this year either.

"We decided to lower our 2017 sales forecast by 3.9 percent to KRW 1.8 trillion. The firm's operating profit will also likely decline 5.6 percent to KRW 662.5 billion from our earlier projection."

One industry analyst, who asked to be unnamed, said new gambling addiction measures introduced last year, will make it “harder for the company to make money.”

"Kangwon Land will also be pressured to spend more to rehabilitate gambling addicts and support local communities, which will chip away at its bottom line."


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