Kangwon Land: Regulatory Improvements to Result in Higher Earnings and Valuation Multiples Expansion

• Kangwon Land has received approval to expand its total casino area from 14,512 square metres previously to 20,260 square metres (up 40%).

• The betting limits in the foreign players only zone will increase significantly from 300,000 won (about US$225) to 300 million won (about US$225,000). This represents a 1000x increase.

• We would argue that there is a high probability of Kangwon Land benefiting not just from higher sales and profits but also from higher valuation multiples.

Photo by Michał Parzuchowski on Unsplash

On 5 September, there were major regulatory changes positively impacting Kangwon Land (035250 KS), the largest casino operator in Korea.

Kangwon Land is the only casino in Korea to allow local Koreans to gamble. The following are the major changes announced by the Ministry of Culture, Sports and Tourism regarding Kangwon Land:

• Approval of total casino floor space expansion - Kangwon Land has received approval to expand its total casino area from 14,512 square metres previously to 20,260 square metres (up 40%). As part of the increase in casino expansion, Kangwon Land could add more gambling tables and gaming machines.
  

  • More casino gambling tables - The company could add 50 new tables from its existing 200 tables (up 25%).

  • More gaming machines - The company could add 250 gaming machines from its existing 1,360 machines (up 18.4%).