Demand strong as losses narrow for Kangwon Land in 1Q21

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Kangwon land suffered an operating loss of KRW59.62 billion (US$53.2 million) and a net loss attributable to shareholders of KRW40.89 billion (US$36.5 million) in 1Q21, both vastly improved from recent quarters despite being closed until mid-February.

By comparison, Kangwon Land had booked an operating loss of KRW186.77 billion (US$166.8 million) and net loss of KRW156.12 billion (US$139.4 million) in the first quarter of 2020, and more recently an operating loss of KRW76.12 billion (US$68.0 million) and net loss of KRW33.33 billion (US$29.7 million) in 4Q20.

Sales in 1Q21 were KRW97.44 billion (US$87.0 million), down 58.7% on sales of KRW236.01 billion (US$210.8 million) in the same period last year and down 25.8% on sales of KRW131.32 billion (US$117.3 million) in Q4.

However, JP Morgan analysts DS Kim, Derek Choi and Livy Lyu noted that demand had quickly recovered upon reopening in Q1 to the extent that operations were allowed.

Kangwon Land closed its doors for a third time in the space of 12 months on 8 December 2020 due to an outbreak of COVID-19 across much of the country and only reopened on 15 February with a capacity limit of 1,200 people.

Our key takeaway is how resilient demand was during the latter half of Q1 after the re-opening, the analysts said in a note.

During 45 days of operation, mass/slot GGR per day recovered to 45% to 50% of pre-COVID levels despite the severe cap on floor capacity. VIP GGR/day was already back to 80% to 85% of pre- COVID levels thanks to relatively limited impact from social distancing.

Predicting that all social distancing requirements may be lifted sometime next year, JP Morgan added, Return to normalcy is just a matter of time.

Whats more, there is clearly overwhelming demand, as our checks suggest about 8,000 to 9,000 players are queuing every day (virtually) to enter Kangwon Land, only around 2,000 of which are admitted via lottery. We are as confident as ever that well see its revenues go back to pre-COVID levels as soon as capacity normalizes.