[Click eStock] "Paradise Struggled with Corona, Rapid Recovery Hopes Up"

Expected Increase in Yeongjongdo Complex Resort Benefits After Travel Resumption↑

Paradise City Panorama

[Asia Economy Reporter Minwoo Lee] Paradise, which struggled greatly due to the impact of COVID-19, is expected to recover its performance rapidly. Having already undergone two rounds of workforce restructuring, resulting in a much lighter cost structure, it is analyzed that the performance rebound due to the resumption of travel following the expansion of COVID-19 vaccinations will be steep.

On the 10th, KB Securities newly issued a 'Buy' investment opinion on Paradise with a target price of 25,000 KRW, citing this background. The closing price the previous day was 19,250 KRW.

Paradise's stock price fell about 1.5% from February 14 last year to the previous day. This is a very poor level compared to the KOSPI, which rose 43.3% during the same period. However, it is expected to show a recovery trend surpassing the KOSPI in the future. KB Securities researcher Sunhwa Lee explained, "Paradise succeeded in turning a profit in 2022 and is expected to record a 44.6% growth rate in controlling shareholder net income in 2023, which exceeds the KOSPI controlling shareholder net income growth market consensus of 8.5%."

In particular, owning the integrated resort Paradise City (P-city) on Yeongjongdo Island in Incheon, which boasts geographical advantages, is considered a strength. Yeongjongdo has the advantage of being an Asian hub with many international flights and short flight times from major Chinese hub cities. The researcher said, "Currently, four integrated resorts are preparing to open additionally in the Incheon Yeongjongdo integrated resort cluster," adding, "Rather than concerns about oversupply, it is expected to create synergy effects as an integrated resort complex like the Macau cluster."

Cost reductions already underway are also a positive factor. Paradise already conducted two rounds of workforce restructuring last year. In the third quarter, 20% of the non-casino staff at Paradise City were adjusted, and in the fourth quarter, the cost structure was greatly simplified through voluntary retirements at headquarters and Walkerhill. As a result, it recorded a positive EBITDA in the first quarter. The researcher explained, "Even amid the global COVID-19 pandemic, it will reduce losses faster compared to competitors."