[Click eStock] Overseas Arrivals Quarantine Lifted... Will Paradise Benefit from Reopening?

[Asia Economy Reporter Kwon Jae-hee] Yuanta Securities on the 16th gave Paradise a 'Buy' rating with a target price of 22,000 KRW.

Along with the global trend of lifting border closures, South Korea will exempt quarantine for overseas arrivals who have completed vaccination starting from the 21st, making casino stocks beneficiaries of the reopening.

In particular, China and Japan, the main target countries for the domestic casino industry, still maintain conservative quarantine policies, so South Korea's quarantine exemption is improving investment sentiment toward global reopening.

The key factor seems to be the movement of Chinese VIPs.

Researcher Lee Jin-hyeop of Yuanta Securities interpreted, "Under the ideology of common prosperity, Macau casino regulations continue, so it is necessary to observe whether Chinese VIPs will shrink."

In the case of Paradise, the proportion of Chinese VIPs was estimated to be around 22% as of 2019.

Also, unlike competitors, Paradise is a private operator and operates the integrated resort Paradise City. Accordingly, expectations can be placed on the effects of restructuring and profitability improvement due to the expansion of the mass customer base at Paradise City.

Researcher Lee said, "Paradise's operating profit margin (OPM) is expected to approach 13% in 2023, which is a significant improvement compared to 5.3% in 2019," adding, "Therefore, among casino operators, its stock price recovery elasticity may be relatively strong."