[Click eStock] "Paradise, Q3 Profit Turnaround Expected... Q4 Performance Improvement Anticipated"

[Asia Economy Reporter Song Hwajeong] Kiwoom Securities maintained its 'Buy' investment rating and target price of 22,500 KRW for Paradise on the 25th, expecting the company's operating profit to turn positive in the third quarter of this year.

Kiwoom Securities forecasted that Paradise's third-quarter sales would reach 122.1 billion KRW, a 34.8% increase compared to the same period last year, and operating profit would turn positive at 3.2 billion KRW, significantly exceeding market consensus. Researcher Namsoo Lee of Kiwoom Securities analyzed, "Although there was a decline in key indicators compared to the previous quarter, with 8,000 VIP visitors and a drop amount (the amount casino customers exchanged for chips) of 430 billion KRW, the hold rate (net sales/drop amount) improved to 16.4%, estimating combined casino sales at 76 billion KRW. Additionally, no special additional costs other than variable costs related to casino operations occurred, stabilizing the cost of sales at 106.6 billion KRW, which is expected to aid profit improvement." The third quarter is also expected to see simultaneous improvements in the non-casino sectors, such as hotels and integrated resorts, coinciding with the summer vacation season.

Monthly casino sales for the third quarter recorded 6.9 billion KRW, 59.5 billion KRW, and 9.6 billion KRW for July through September, respectively. The average monthly VIP visitors in the first half of the year were 3,950, with a drop amount of 145.6 billion KRW. In the third quarter, the average monthly VIP visitors decreased to 2,680 and the drop amount to 143.3 billion KRW due to the Level 4 social distancing measures, but the drop amount per visitor grew by 45% compared to the first half, offsetting the operational downturn caused by stricter distancing. However, the hold rate showed significant volatility, with monthly rates of 3.5%, 31.5%, and 7.6% in the third quarter. Researcher Lee stated, "The decline in base indicators due to fewer visitors seems to have influenced this, and with the phased recovery of daily life (With Corona) in the fourth quarter, visitor numbers and drop amounts are expected to increase and stabilize."

Resumption of foreign visitors is also anticipated. Foreign visitors from Singapore, where a travel bubble (safe travel zone) agreement was signed in mid-November, are expected to begin arriving. Researcher Lee said, "Foreign entry will resume as vaccine certification expands through mutual agreements," adding, "Paradise is expected to benefit the most from the recovery of Japanese visitors, with the effect on the Yeongjongdo integrated resort being particularly prominent upon the re-entry of Japanese VIPs." He further noted, "Due to the nature of casino integrated resorts, improvements in casino performance will offset the impact of high fixed costs in non-casino sectors, leading to overall recovery. Especially, changes in the Macau casino industry will positively affect domestic casino integrated resorts that meet global standards."

This content was produced with the assistance of AI translation services.