[Click eStock] "Kangwon Land, Positive Momentum from Casino Expansion and Regulatory Relaxation"

Casino Expansion Approval and Relaxation of Foreign Visitor Restrictions
Permanent Residents Also Allowed, Betting Limits Significantly Increased
Possibility of Increased Shareholder Returns and Dividend Payout Ratio

On the 8th, KB Securities analyzed that the regulatory easing by the Ministry of Culture, Sports and Tourism is injecting positive momentum into the stock price of Kangwon Land. They maintained a 'Buy' investment rating and a target price of 20,000 KRW. Kangwon Land's closing price on the previous trading day was 16,760 KRW.

Ryu Eun-ae, a researcher at KB Securities, stated, "According to the approval from the Ministry of Culture, Sports and Tourism, Kangwon Land plans to expand the casino general business area from the existing 4,390 pyeong to 6,129 pyeong and increase the number of gaming machines," adding, "This is related to the plan to convert the 1st and 2nd floors of the theme park operated by Kangwon Land into casino business areas and open a new casino facility around 2028 by adding 50 mass tables and 250 slot machines in the new space."

Regulations on foreign visitors have also been eased. Previously, only foreign citizens could use Kangwon Land's casino, but now permanent residents are also permitted. The betting limit is expected to increase from the current maximum of 300,000 KRW to up to 300 million KRW. The full-scale easing of regulations on foreign visitors is expected to be applied from next year following the legal amendments. Additional regulatory easing to secure Kangwon Land's competitiveness is also anticipated ahead of the opening of the Osaka integrated resort around 2030.

Short-term momentum is expected to take time due to regulatory easing, with a focus on value-up. On September 24, the government announced the inclusion list for the 'Korea Value-Up Index,' but Kangwon Land failed to be included. However, Kangwon Land showed its commitment to shareholder returns by announcing a corporate value enhancement plan on October 2. Currently, Kangwon Land holds financial assets worth 2.7 trillion KRW, and considering the pre-COVID five-year average dividend payout ratio (83.3%), there is ample room to increase the dividend payout ratio. Additionally, the possibility of canceling the treasury shares already held (5.2%) is also expected.

Kangwon Land's consolidated sales for the third quarter are forecasted at 381.6 billion KRW (+2.1% YoY, +12.9% QoQ), and operating profit at 85.8 billion KRW (-6.6% YoY, +16.0% QoQ, operating margin 22.5%), which is expected to meet the consensus operating profit of 80.7 billion KRW. Researcher Ryu said, "Since the government announced the 'Guidelines for Prohibiting Casino-like Activities' in May to eradicate illegal hold'em pubs and strengthened crackdowns, a trend of traffic improvement has been observed."