[Click e-Stock] "Still Under Renovation"... A Casino with Generous Dividends

Eugene Investment & Securities has lowered its target price for Kangwon Land to 22,000 won, while maintaining its buy rating.

On August 6, Hyunji Lee, an analyst at Eugene Investment & Securities, stated, "We have lowered our target price as we revised down our earnings forecasts. In the short term, there needs to be consideration of cost burdens and revenue loss due to large-scale renovations. However, in the long term, Kangwon Land is securing growth drivers through mid- to long-term projects, aiming to complete construction by 2028, including the member casino, hotel, and condotel currently under construction, as well as the second casino, cable car, and new parking facilities, which is a positive sign."

In the second quarter of this year, Kangwon Land's consolidated revenue was 345.6 billion won, down 4.2% compared to the same period last year. Operating profit was 43.2 billion won, down 26.2%, both falling short of expectations. Analyst Lee commented, "The decline in general gaming floor visitors and drop amounts resulted in negative growth. While the VIP drop continues to show growth, the general gaming sector is still sluggish."

Lee further explained, "Since March, renovations for the member gaming area, the casino hotel, and some rooms in the Mountain Condo began, which has contributed to the decline in revenue. The hotel is scheduled for completion in the first quarter of 2028, and the condo in the fourth quarter of next year. This makes revenue losses during the construction period inevitable." She added, "The total investment budget for this year is set at 145.4 billion won, with 87.2 billion won executed as of the second quarter. Given the construction timeline, next year’s investment budget is expected to be expanded compared to this year."

Although Kangwon Land's short-term earnings momentum is limited, its shareholder return policy continues to be viewed positively. Lee highlighted, "While maintaining a dividend payout ratio of over 50%, Kangwon Land is considering cancelling 7.4% of its treasury shares by August next year. After completing a 29 billion won treasury share buyback in January, the company also plans to conduct an additional 20 billion won buyback in the second half of this year."

This content was produced with the assistance of AI translation services.