Kangwon Land Inc., a South Korean casino resort operator, posted information about its financial performance in the fourth quarter of 2014. The company currently manages the only casino that allows residents of the country to enter its premises.
Kangwon Land reported net profit of KRW47.4 billion ($42.7 million), up 69.8% as compared to the amount of KRW27.9 billion ($25.1 million) that was announced this time last year.
Apart from the increase in net profit, a 12.3% growth in gaming revenue was also reported in the three-month period ended December 31. The gambling operator announced that the sum of KRW351.8 billion ($317.2 million) was generated.
Revenue from VIP players rose 34.1%.
Gaming revenue constituted 94.2% of the operator’s total revenue, which amounted to KRW373.6 billion ($336.9 million) in the three-month period in question.
The company’s operating profit increased 188% to reach KRW119.2 billion ($107.5 million). Thomas Kwon, an analyst for Daiwa Securities Group Ltd., stated that Kangwon Land’s operating profit had surpassed the research house’s prognosis for KRW98 billion ($88.4 million). This rise was attributed to the company’s cost control, which turned out to be quite effective, as well as to the strong operating leverage coming from its slot machines.
Mr. Kwon stated that Kangwon Land’s new chief executive officer, who was appointed back in November 2014, also contributed significantly to the well-being of the company.
The analyst also commented on the fact that during the three-month period in question, the gaming operator posted a one-off impairment loss totaling KRW35.3 billion ($31.8 million). Due to this, it had a 12.7% net-profit margin.
Mr. Kwon said that the company’s excellent performance during the fourth quarter of 2014 indicated that its management team had focused its attention on making casino operations even more effective and reorganizing “overall service divisions”. In other words, at present, executives consider expanding the business less important.
Kangwon Land’s full-year net profit reached KRW359.3 billion ($323 million), posting a 20.8% increased as compared to the figures generated a year ago. Total revenue for 2014 amounted to KRW1.5 trillion ($1.4 billion), up by 10% year-on-year. Gaming revenue increased 11.1% to reach KRW1.4 trillion ($1.3 billion).
Daiwa’s expert pointed out that the research house expects a 9% increase in revenue from the operator’s VIP players for 2015 and an 18% one from slot machines.
At present, there are 17 casinos in South Korea. Yet, as mentioned above, residents of the country are allowed to enter only the venue operated by Kangwon Land, which is located in the Kangwon province.
