[Click eStock] "GKL, Expected Loss Due to April Operational Gap... Stock Price Already Reflects It"

[Asia Economy Reporter Oh Ju-yeon] Meritz Securities analyzed that GKL's operating loss in the second quarter of this year was in line with expectations, and that the current stock price sufficiently reflects this poor performance. On the other hand, they maintained a 'Buy' investment rating and a target price of 21,000 won, stating that expectations for recovery have not yet been factored in.

According to the Financial Supervisory Service's electronic disclosure system on the 11th, GKL posted a consolidated operating loss of 32.1 billion won in the second quarter of this year, turning to a deficit compared to the same period last year. Sales amounted to 23.263 billion won, down 80.2% year-on-year, and net loss was 23.559 billion won, also turning to a deficit.

Researcher Lee Hyo-jin of Meritz Securities explained, "In April, as part of measures to prevent the spread of COVID-19, casino operations were closed, and even after reopening in May, operations were limited to foreign residents in Korea, resulting in sales remaining around -70% compared to the same period last year, and losses in line with expectations."

She stated that the stock price sufficiently reflects this poor performance and that the focus should now shift to recovery.

Researcher Lee said, "Since the March low, GKL's stock price has recovered to pre-COVID-19 levels, buoyed by the stock market rally, but like other travel and casino companies that experienced stock price recovery without industry changes, the signs of recovery have become distant, and since May, the stock price has moved in the opposite direction to the market," interpreting this as "due to investors beginning to turn away as the timing of earnings recovery is delayed." She also revised downward this year's operating profit to -59.5 billion won, reflecting a slower-than-expected recovery of Korea-China routes.

Regarding the current stock price, the researcher said, "GKL holds cash and cash equivalents of about 500 billion won, and excluding this, the operating value implied by the current market capitalization is only 300 billion won, indicating that the current poor situation is reflected."

This content was produced with the assistance of AI translation services.