[In-Depth] Kangwon Land’s Paradox: Stock Plummets Despite 3 Trillion Won Revenue Goal

Kangwon Land has declared a goal to reach 3 trillion won in revenue by 2035, but the stock market's reaction has been cold.

 

Since finalizing its new management innovation strategy at the board meeting on October 26, the stock price has fallen for three consecutive days, dropping as low as 13,500 won during trading on the 29th. While it saw a slight rebound on the 30th, the market capitalization remains below 3 trillion won.

 

Despite presenting a growth blueprint that includes the 'K-HIT' project—a 2.5 trillion won investment by 2032—and a 3 trillion won revenue target, the market seems hesitant to recognize its future value.

 

According to Kangwon Land’s public filings and stock trends, the share price fell from 13,870 won on October 26 to 13,710 won on the 27th, 13,680 won on the 28th, and 13,640 won on the 29th.

 

Although the closing price rebounded slightly to 13,820 won on the 30th, it is still about 2.4% lower than the 14,160 won closing price on the 23rd, the last trading day before the announcement.

 

Its market capitalization, which once exceeded 5 trillion won, has slumped into the 2 trillion won range.

 

What is more concerning is the deterioration of the company's profitability.

 

Operating profit, which reached 618.6 billion won in 2016, plummeted by 62% to 235.3 billion won last year. Despite its monopoly as the only casino for locals in Korea, the company finds itself in the paradoxical situation of seeing both profitability and corporate value decline simultaneously.

 

Furthermore, while the casino business has recorded a cumulative surplus of 15.7245 trillion won, the non-casino businesses—including hotels, condos, and ski resorts—have incurred a deficit of 1.685 trillion won.

 

Of course, one cannot definitively attribute the post-announcement stock decline solely to the announcement itself, as various factors like overall market trends and earnings forecasts influence stock prices.

 

However, the fact that investor sentiment has not significantly improved despite large-scale investments and innovation strategies is something Kangwon Land's management must address.

 

Why is Kangwon Land earning less than in the past and being undervalued by the market, despite holding the 'goose that lays the golden eggs'—a monopoly casino?

 

We examined the causes across four aspects: the cost of casino regulations, chronic deficits in non-casino businesses, weakening customer competitiveness, and the return on investment for the K-HIT project.

The Cost of Regulation: Operating Profit Plummets 62% in 10 Years

 

In 2016, Kangwon Land's most profitable year, consolidated revenue was 1.6965 trillion won with an operating profit of 618.6 billion won, resulting in an operating margin of 36.5%.

 

In contrast, for 2025, revenue is projected at 1.4767 trillion won with an operating profit of 235.3 billion won, dropping the operating margin to 15.9%.

 

While revenue decreased by 13%, operating profit fell by a staggering 62%. During the same period, casino visitors also dropped by 21.8%, from approximately 3.17 million to 2.48 million.

 

A key factor here is government regulation.

 

Kangwon Land became a target for stricter regulations after repeatedly exceeding the total sales limit for the gambling industry between 2013 and 2017.

 

In 2018, the number of casino tables was reduced by 20, and daily operating hours were cut from 20 to 18 hours.

 

Although the 200-table and 20-hour operating system has been restored, various regulations regarding entry frequency, betting limits, and the expansion of gaming facilities remain in place.

 

While not all of the 383.3 billion won decline in operating profit can be blamed on regulations—as rising labor costs, facility maintenance, non-casino losses, and changing consumer behavior also play a role—the impact of these regulations on customer capacity and competitiveness needs objective verification.

 

In particular, there is a need for rational policy improvements that can reduce inconvenience for regular leisure visitors while maintaining the public interest of preventing gambling addiction.

1.685 Trillion Won Non-Casino Deficit: A Structure Supported by Casino Profits

 

Another issue is the chronic deficit in non-casino businesses.

 

According to data submitted by Kangwon Land to Rep. Koo Ja-keun of the National Assembly's Trade, Industry, Energy, SMEs, and Startups Committee in October, the casino business had a cumulative surplus of 15.7245 trillion won as of last year.

 

Conversely, seven non-casino businesses, including hotels, condos, and ski resorts, incurred a cumulative loss of 1.685 trillion won.

 

By business, the Grand Hotel lost 542.5 billion won, condos 509.7 billion won, the ski resort 330.8 billion won, the Palace Hotel 195.8 billion won, Water World 96.1 billion won, and machine manufacturing 14.8 billion won.

 

In the last six years alone, the cumulative loss from non-casino businesses reached 885.4 billion won.

 

Last year, while the casino division generated 529.8 billion won in profit, the non-casino division lost 147.4 billion won.

 

Essentially, the structure where casino profits subsidize the losses of hotels, condos, and ski resorts persists.

 

The National Assembly Budget Office analyzed that last year, the revenue of the six major non-casino businesses was only 183.4 billion won, while total costs reached 341.3 billion won—costs were 1.86 times the revenue.

 

As a public enterprise, Kangwon Land has a duty to revitalize the local economy of the former mining region. However, chronic deficits cannot be ignored simply for the sake of public interest. The economic viability and local contribution of each business must be evaluated to improve the profit structure.

Shrinking Customers and Expanding Overseas Options: The Trap of Monopoly

 

Kangwon Land's third risk is weakening customer competitiveness.

 

While it is the only casino for locals in Korea, it does not hold a monopoly on overseas casinos. With many Koreans already visiting Macau, the Philippines, and Singapore, the opening of the Osaka Integrated Resort (IR) in Japan in 2030 is expected to further expand customer options.

 

A survey presented at the Korea Casino Tourism Association seminar on October 14 showed that 52.1% of 493 Kangwon Land customers expressed an interest in visiting the Osaka IR.

 

Reasons included wanting to 'freely enjoy casino games' (38.4%) and 'expecting fewer entry restrictions' (20.7%).

 

Researchers suggested a scenario where 316.5 billion to 1.266 trillion won in gaming expenditures could leak to the Osaka IR annually.

 

Customer complaints regarding entry queues, slot machine seat availability, and table game wait times persist. If customers who have experienced the superior facilities and services of overseas casinos increase, Kangwon Land's monopoly status alone may not be enough to retain them. This is why Kangwon Land must analyze the reasons for declining visits and enhance its game products and service competitiveness.

2.5 Trillion Won K-HIT: Verifying ROI is Key

 

Kangwon Land is pushing for the K-HIT project, which includes expanding the casino floor, renovating hotels and condos, and increasing tourism facilities.

 

The planned investment of 2.5 trillion won by 2032 is about 1.7 times the 2025 revenue and 10.6 times the operating profit.

 

However, large-scale investment does not guarantee high returns. What matters to investors is how much operating profit and cash flow can actually be generated.

 

With existing non-casino businesses losing around 140 billion won annually, the profitability of new facilities is the key variable. To reach 3 trillion won in revenue by 2035, Kangwon Land needs an additional 1.5233 trillion won compared to last year's revenue, requiring an average annual growth of about 7.3%.

 

Even if revenue doubles, if labor, maintenance, and depreciation costs rise alongside it, operating profit may fall short of expectations. Therefore, it is necessary to objectively analyze the Internal Rate of Return (IRR) and Net Present Value (NPV) for each K-HIT project and disclose stage-by-stage performance.

Market Cap Below 3 Trillion: Doubts on Growth Potential

 

Kangwon Land's stock decline carries significance beyond mere market fluctuations. Previously, its high entry barriers, profitability, and cash flow were its main attractions. Now, concerns are growing that growth is slowing despite its monopoly.

 

In the first half of this year, consolidated revenue decreased by 0.4% and operating profit fell by 15.1% year-on-year.

 

While some analysts suggest the stock might be undervalued given its stable financial structure and dividend yield, recovery will be difficult without confidence in future profit growth.

 

Kangwon Land's challenges are clear: it must work with the government to objectively analyze the effectiveness of casino regulations, improve the chronic deficit structure of non-casino businesses, and prioritize customer-centric competitiveness. Management's performance evaluations should shift from focusing on total revenue and investment scale to prioritizing operating margins, ROI, and customer satisfaction.

 

With only about four years left until the Osaka IR opens, Kangwon Land must prove its competitiveness and investment results. The true crisis is not that it has become a loss-making entity, but that it is earning less than in the past while failing to secure market trust in its future growth. The management has presented a vision for 2035, but the stock market is demanding proof of profitability and growth potential starting right now in 2026.