[Click eStock] "Kangwon Land, Visitor Recovery Delayed... Target Price ↓"

[Asia Economy Reporter Hwang Yoon-joo] Samsung Securities announced on the 9th that the recovery of visitor numbers at Kangwon Land is being delayed. Accordingly, it maintained a 'Buy' investment rating but lowered the target price to 28,000 KRW.

Park Eun-kyung, a researcher at Samsung Securities, said, "We are revising down the profit forecast due to the slower-than-expected recovery in visitor numbers," adding, "We are lowering the target price by 20%."

On a consolidated basis for the fourth quarter, Kangwon Land's sales increased by 38% year-on-year to 334.7 billion KRW, and operating profit turned positive to record 18.4 billion KRW. These figures are 7% and 69% below consensus, respectively.

Researcher Park pointed out, "Visitor numbers in the third quarter of 2022, when operations were restricted, recovered to 85% of the third quarter of 2019," but "visitor numbers in the fourth quarter of last year did not even reach 85% of the fourth quarter of 2019."

The domestic-only casino business has always been regarded as a supplier-dominant industry. It showed defensive performance even during economic downturns. Researcher Park stated, "We expect that the removal of indoor mask mandates starting in February will somewhat help demand recovery."

However, she evaluated that if the demand recovery trend does not become visible even after February, there will inevitably be deeper concerns about what momentum could stimulate demand.

Researcher Park said, "Reflecting the delayed recovery in visitor numbers, we are lowering the 2023 operating profit forecast by 23%," and added, "If visitor numbers do not increase significantly after February, the basis for corporate value assessment should be recalculated considering factors such as dividend policy in addition to performance."