Return to growth expected in 2017
Kangwon Land, the only South Korean gaming resort currently open to locals, saw top-line growth stall at 3.8 percent in 2016. But the property could do better this year, reports the Asia Gaming Brief.
Citing a report from Morgan Stanley, the publication says the resort in remote Gangwon Province has suffered due to political instability, talk of a possible second locals license and “delays in upgrading its product offering.” In Kangwon Land’s favor: a renovated slot floor and predicted domestic growth.
“We believe strong domestic demand will continue to support KWL’s stable top-line growth until at least 2025 when its monopoly license is due for renewal,” Morgan Stanley reported. “Positive catalysts include the slot machine upgrade in June, Winter Olympic traffic in 1Q18 and waterpark opening in summer 2018.” But the Olympics also come with a downside: an expected donation of up to KRW50 billion ($44.6 million).
“We are now at levels seen in 2014, with annual sales/net profit [at] 17 percent/27 percent below our current 2017 estimates,” said the report from analysts Jay Lee, Praveen Choudhary and Alex Poon.
The bank expects casino sales of approximately KRW1.68 trillion (US$1.49 billion), and non-casino sales of about KRW79 billion.
Profit at Kangwon Land increased 2.9 percent year-on-year in 2016, but profit for the final quarter dropped 31.4 percent. “We think key market concerns were around regulatory uncertainties (losing monopoly license amid discussion on the second locals casino); and earnings momentum slowing,” wrote the analysts.
Nevertheless, they foresee a return to growth in the second half of this year.
