South Korean casino operator Kangwon Land Inc extended its losing streak in the second quarter with net profit tumbling 10.7 percent from the prior-year period.
Kangwon Land, the only South Korean casino that’s legally allowed to cater to local residents, posted a KRW110.4 billion (US$96.9 million) net profit, the second Korean casino operator to announce a dismal second quarter result.
Analysts pointed out that the second quarter data was the “worst” result posted by Kangwon Land in more than five years.
“The disappointment came from mass (-9 percent year-on-year) and slots (-7 percent), while VIP (-3 percent) didn’t help either,” said JP Morgan Securities analysts DS Kim and Sean Zhuang in a Wednesday note. “In our view, this seemingly reflects Kangwon Land’s efforts to ‘adjust’ revenues lower amid regulatory scrutiny, and the timing of business normalization remains frustratingly uncertain.”
Data provided by Kangwon showed that its revenue from sales dropped 6 percent to KRW387.0 billion ($338.9 million). In contrast, non-gaming revenue increased 11.1 percent year-on-year to KRW12 billion ($10.51 million).
Kangwon’s quarterly operating income also dropped 15.5 percent year-on-year, to KRW135.5 billion ($118.7 million).
“Kangwon Land’s second quarter was weak, with operating profit falling 15 percent year-on-year and missing estimates by [about] 10 percent, dragged by a lower-than-expected top line,” JP Morgan analysts noted.
In total, Kangwon’s accumulated sales in the January to June 2017 period were down 4.5 percent to KRW810 billion ($709.33 million) from the prior-year period. Net profit for the six months to June 30 stood at KRW240.2 billion ($210.35 million), a decline of 9.9 percent from a year earlier.
Thomas Kwon, an analyst from Daiwa Securities Group Inc., projected that Kangwon’s losing streak will continue until the end of the year. It is likely that Kangwon will jump back to growth next year.
“We forecast Kangwon Land’s revenue and earnings to grow 9.6 percent year-on-year and 12.6 percent year-on-year in 2018,” he said.