By Seo Jee-yeon
The government’s approval of a casino facility expansion has been pushing the stock price of Kangwon Land to hit a record high in 52 weeks.
The company’s shares soared 13.31 percent to 31,500 won ($29) on Monday. The jump was expected as the disclosure was issued after the stock market closed last Friday.
According to company officials, the state-invested casino and resort operator, located in Jeongseon County, Gangwon Province, will double the floor of the game room to 11,824 square meters. The company plans to increase the number of game machines by about 50 percent to 1,560.
“We expect to start operating the newly expanded game room early next year,” a company official said.
Stock analysts covering casino stocks rushed to raise the target price of Kangwon Land.
“The facility expansion is expected to increase the number of visitors by 35 percent after the second quarter of next year,’’ Han Ik-hee, an analyst from Hyundai Securities, said. He raised the target stock price of the company 20 percent to 43,000 won based on an estimate that the company’s operating profit is to rise 39 percent.
Daewoo Securities also renewed the target stock price to 37,000 won, a 32 percent rise from the current 28,000 won. It said that Kangwon Land’s casino business will enter the growth cycle again for the next few years thanks to the facility’s first expansion in eight years.
Business at Kangwon Land has been slow due to a lack of growth momentum for the past few years. Kangwon Land’s operating profit in the third quarter of this year fell 21 percent to 106 billion won from the same period last year.
In contrast to shares of Kangwon Land, other casino stocks like GKL and Paradise, which are open to foreigners only, has been strong throughout the year, boosted by a rising number of Chinese visitors.
Kangwon Land, which local visitors dominate, has yet to develop a strategy and specific plans to attract foreign visitors.
Kangwon Land’s casino, which opened in 2000, is the nation’s first and only casino to be open to Koreans. It is also a government-invested casino, established under the ”special law to support the development of abandoned mine areas,“ which was passed in 1995. The largest shareholder is Mine Reclamation Corp. under the Ministry of Knowledge Economy with a 36 percent shareholding, followed by Kangwon Development Corp. with 5 percent.
(jyseo@heraldcorp.com)