Operator News
South Korea – Kangwon Land to feel affects of political uncertainty
By Phil - 22 March 2017
Morgan Stanley has downgraded its outlook on South Korea’s Kangwon Land casino following political uncertainty that resulted in President Park Geun-Hye being arrested. The analyst said that Kangwon Land’s revenues have fallen to ‘2014 levels.’
Morgan Stanley analyst Jay Lee said: “We are now at levels seen in 2014, with annual sales/net profit 17 per cent/27 per cent below our current 2017 estimates. We think key market concerns were around: regulatory uncertainties (losing monopoly license amid discussion on the second locals-open casino); and earnings momentum slowing.”
Morgan Stanley predicts an improvement but has dropped its full-year estimates, believing that GGR will come in at US$1.49bn for the year with non-gaming revenues coming in at $70.6m.
“We maintain our view on Kangwon Land to secure a monopoly licence by 2025,” Morgan Stanley added. “Slot machine upgrades planned in 2016 have been delayed to 2017, due to the domestic political situation (the administrative office associated with the ongoing political uncertainty is the regulatory authority of Kangwon Land, hence no progress was seen on strategy or plans in second-half 2016). Overall we reduce our revenue expectations due to delay in slot machine upgrades. As such, the growth momentum will return in second-half 2017.”
