[Asia Economy Reporter Ji Yeon-jin] With growing expectations for 'With Corona' next month, casino stocks are gaining attention. It is anticipated that once the stringent quarantine regulations to prevent the spread of COVID-19 are further eased, performance will improve significantly.
According to the financial investment industry on the 16th, Kangwon Land and Paradise are expected to turn a profit in the third quarter of this year, with operating profits of 29 billion KRW and 1 billion KRW respectively. GKL and Lotte Tour Development are projected to continue posting losses of 33.1 billion KRW and 18.5 billion KRW. This is due to the worsening business environment following the increase in social distancing measures amid the spread of the COVID-19 Delta variant in August.
However, if With Corona becomes a reality next month, various regulations such as hotel room occupancy rates, simultaneous casino admission limits, and allowance of side betting are expected to be eased faster than anticipated.
Lee Ki-hoon, a researcher at Hana Financial Investment, stated, "Considering that casinos are a regulated industry, we prefer Kangwon Land, which has increased table games and operating hours, and Lotte Tour Development, which started new casino operations during the COVID-19 period, from the perspective of regulatory easing."
However, risks related to China are considered variables for casino stocks. China, marking the 100th anniversary of the Communist Party, has emphasized common prosperity, and with the US-China conflicts highlighting license issues, Macau's VIP demand has significantly shrunk. In particular, the amendment to the casino industry law includes appointing government officials as inside directors of casino companies, resembling a past case where Kangwon Land's VIP ratio shrank from an initial 35% to 15% due to a similar issue.
The researcher said, "The contraction of VIP gaming demand will lead to a contraction of the Asian casino industry, so it is a negative issue," but added, "Nothing has been confirmed yet, so we need to observe a bit longer. However, a decline in the stock price of Macau, the industry leader, is not a positive issue from a stock price perspective."
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