[Click eStock] Kangwon Land, Rising Expectations for Earnings Recovery with 'Reopening' Increase

[Asia Economy Reporter Kwon Jae-hee] KB Securities maintained a 'Buy' rating and a target price of 33,000 KRW for Kangwon Land, citing reopening expectations.

Kangwon Land's consolidated sales in the fourth quarter of last year reached 242.1 billion KRW, an 84.4% increase compared to the same period last year. The operating loss was 20 billion KRW, which was below market expectations.

Nevertheless, positive outlooks for Kangwon Land are driven by expectations of reopening.

In the fourth quarter of last year, Kangwon Land's performance fell short of market expectations due to a temporary sharp decline in visitors in December caused by the spread of the Omicron variant of COVID-19. However, as health authorities are currently considering classifying Omicron as a seasonal flu and transitioning to a routine quarantine system, the number of visitors to Kangwon Land is expected to increase again.

In fact, it was confirmed that Kangwon Land's traffic rapidly recovered during the phased daily recovery period.

Despite the operating hours being shortened from the previous 20 hours (10 AM to 6 AM) to the current 12 hours (10 AM to 10 PM) due to the spread of the Omicron variant, recent traffic has shown a steady upward trend. With the winter vacation and Lunar New Year holidays, visitors increased, and weekend traffic reportedly rose to 4,300 people. (Average daily traffic: Q1 2021 - 1,938 people → Q2 2021 - 2,191 people → Q3 2021 - 2,824 people → Q4 2021 - 3,297 people, about 3,500 people during the phased daily recovery in November).

Currently, simultaneous occupancy is managed through an ARS pre-reservation system, and since mid-December, on-site ticket sales have also started, contributing to the increase in traffic.

Researcher Lee Seon-hwa of KB Securities analyzed, "If the system transitions to routine quarantine and casino entry becomes free without ARS pre-reservation, performance will quickly recover due to the inelastic demand for casinos."