[Click eStock] “Lotte Tour Development, Casino Performance Reflecting Summer Warmth”

With Expectations for With-Corona Rising
KB Securities Maintains Lotte Tour Development Target Price at 28,000 Won

[Asia Economy Reporter Gong Byung-sun] Lotte Tour Development is expected to show strong performance in the third quarter of this year, coinciding with the summer peak season. Expectations for With Corona, which means a phased return to normal life amid the COVID-19 situation, are also spreading.

On the 10th, KB Securities maintained its investment opinion of 'Buy' and a target price of 28,000 KRW for Lotte Tour Development. The closing price on the previous day was 19,400 KRW.

The anticipated improvement in casino performance had a positive impact. The Dream Tower Casino opened in June and recorded a drop amount (the amount exchanged for chips by casino visitors) of 32.3 billion KRW for the month of June. In the second quarter, the number of operating days was only about 20, falling short of the expected monthly 60 billion KRW. However, in the third quarter, which includes the summer peak season in July and August, the drop amount is expected to exceed expectations. KB Securities researcher Lee Seon-hwa explained, "With the summer peak season, the number of foreign residents in Korea visiting Jeju for tourism and the Dream Tower Casino has increased," adding, "Regular customers have also been formed."

This month also includes the Chuseok holiday, so the third quarter drop amount is expected to increase further. Accordingly, KB Securities forecasts Lotte Tour Development's third quarter drop amount to be about 226 billion KRW, nearly seven times higher than in June.

The hotel sector is also expected to show positive signs. With the summer peak season, the average daily rate (ADR) was raised from about 270,000 KRW in the second quarter to about 290,000 KRW. The occupancy rate (OCC) is also expected to slightly increase from about 70% in the second quarter to 72% in the third quarter. Researcher Lee said, "Despite the peak season, Tower 2 rooms were opened in September, and due to the implementation of social distancing level 4 in Jeju, the OCC only slightly increased," adding, "Although the base increased, making the OCC growth appear slow, it is a positive effect because the number of rooms sold increased."

Expectations for With Corona are also growing. The 5-star hotel Grand Hyatt Jeju has 14 food and beverage (F&B) outlets and various facilities for corporate meetings, incentive tours, conventions, and exhibitions. When the quarantine system shifts to With Corona in November, corporate events are expected to increase, leading to more active hotel usage.