[Click eStock] "Paradise Reduces Deficit, Investment Appeal Rises on Economic Recovery Hopes"

Greater-than-expected restructuring effects... Optimism rises for business improvement with expanded COVID vaccine rollout

[Asia Economy Reporter Minwoo Lee] Paradise underwent restructuring and achieved better-than-expected performance in the fourth quarter of last year. As COVID-19 vaccine distribution expands, there is analysis that performance improvement may continue with economic recovery.

On the 26th, Meritz Securities maintained a 'Buy' rating on Paradise with this background and raised the target price by 10% to 22,000 KRW. The closing price the previous day was 17,500 KRW.

Paradise recorded consolidated sales of 104.6 billion KRW and an operating loss of 15.6 billion KRW in the fourth quarter of last year. Sales decreased by 61.2% compared to the same period last year, turning to a loss. However, Meritz Securities evaluated that the company performed significantly better than the expected operating loss scale (25 billion KRW).

Researcher Hyojin Lee of Meritz Securities said, "Casino sales in December last year were 75 billion KRW, a higher level than before, but it was expected that the effect of increased sales would be offset by costs related to voluntary retirement, yet the restructuring effect was greater than expected." He added, "There was a loss of 60.5 billion KRW under other losses, which is an impairment loss on held assets such as goodwill of the Busan casino, and it is not an element causing cash outflow or other costs." He continued, "Currently, due to COVID-19 restrictions on foreign entry, all casino customers are foreign residents living in Korea," and added, "The defense effect on casino sales in the Seoul metropolitan area including Seoul and Incheon is higher compared to regions like Busan."

With expectations that the global casino industry may enter a recovery phase, Paradise's performance is also expected to improve. Researcher Lee explained, "Since the 23rd, China has lifted quarantine requirements for entry into Macau, and Thailand exempts quarantine for vaccinated individuals, increasing the investment attractiveness of COVID-19-affected stocks," adding, "Integrated resorts have had high cost structures that acted as a deterrent to investment, but with the changed structure, the investment attractiveness is increasing."