[Click eStock] "Kangwon Land, Conservative Approach Needed Due to Dividend Risk"

[Asia Economy Reporter Song Hwajeong] Yuanta Securities maintained its 'Buy' rating and a target price of 30,000 KRW for Kangwon Land on the 16th, citing increased uncertainty regarding dividends.

Kangwon Land plans to finalize its 2020 dividends at a board meeting in the second week of next month. Researcher Park Seongho of Yuanta Securities stated, "Given the current high uncertainty surrounding dividends, we recommend a conservative investment approach until the 2020 dividends are confirmed."

Some board members representing Kangwon Land's public shareholders are likely to demand dividends at the previous year's level. However, considering the operating situation that recorded an annual net loss of 275.9 billion KRW due to the COVID-19 pandemic, the possibility of a no-dividend decision cannot be completely ruled out. Researcher Park explained, "If there is a dividend cut or a no-dividend decision, some foreign investment funds that have focused on stable dividend continuity may withdraw," adding, "In the event of a dividend shock, there could be a buying opportunity for Kangwon Land." Foreign shareholders have net sold more than 350 billion KRW of Kangwon Land shares since the beginning of last year. As a result, the foreign ownership ratio of Kangwon Land has decreased from 29.73% at the beginning of last year to 22.13% currently.

There is a forecast that operations could recover to near-normal levels in the second half of this year due to COVID-19 vaccinations. Researcher Park said, "The government plans to start vaccinations for the general adult population from the third quarter and aims to achieve herd immunity by November," adding, "If this plan proceeds as scheduled, casino operations are expected to approach normal levels in the second half of the year."

Kangwon Land reported consolidated sales of 131.3 billion KRW in the fourth quarter of last year, a 65% decrease compared to the same period the previous year, and an operating loss of 76.1 billion KRW, turning to a deficit. The operating loss was in line with market consensus.