Kangwon Land and Paradise
Prices Up 20% Compared to Lowest
"Must Consider Speed of Earnings Recovery"
[Asia Economy Reporter Lee Jung-yoon] As the trend of returning to daily life is observed both domestically and internationally after the COVID-19 pandemic, investor interest is gathering around casino-related stocks. This is because expectations for normalization are high amid discussions about the endemic transition of COVID-19, and since stock prices and earnings have bottomed out due to the pandemic's impact, there is significant potential for a rebound.
According to the Korea Exchange on the 22nd, Kangwon Land closed at 26,850 KRW the previous day, marking a 24.01% increase since hitting its 52-week low of 21,650 KRW on December 1 last year. Paradise showed an even larger increase, closing at 17,400 KRW, up 4.82%. Compared to its 52-week low of 13,500 KRW, this is a 28.89% rise. Although there was some adjustment in the morning due to news of an imminent war in Ukraine, the impact was not significant.
Regarding the recent strength of casino stocks, Lee Hwa-jung, a researcher at NH Investment & Securities, analyzed, "The physical accessibility of casino customers, which was damaged by COVID-19, is expected to gradually recover as discussions about the endemic transition are gaining momentum," adding, "We anticipate improvements in the order of domestic social distancing easing, relaxation of international travel restrictions, and expansion of inbound tourism."
Casino-related indicators in Macau and the United States also showed an upward trend. Lee Ki-hoon, a researcher at Hana Financial Investment, stated, "Despite concerns such as the detention of CEOs of junket operators Sun City and Tak Chun, and the recent surge in COVID-19 cases in Hong Kong, the Macau casino index has risen 17% since the beginning of the year, reflecting expectations for reopening." He added, "The American Gaming Association (AGA) reported that last year's gambling industry revenue, including casinos and sports betting, reached $53 billion (approximately 63.3615 trillion KRW), significantly surpassing $43.7 billion (approximately 52.2521 trillion KRW) in 2019." Junket refers to indirect marketing where casinos pay overseas agents to recruit customers, but China is showing regulatory intentions in this area.
However, there is an analysis that consideration is needed regarding the speed of earnings recovery. Park Eun-kyung, a researcher at Samsung Securities, said, "In the case of Kangwon Land, fourth-quarter sales last year fell 13% short of market consensus," adding, "This is believed to be due to fewer visitors than expected because of heightened health concerns among visitors."
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