[Click eStock] "Lotte Tour Development, Finally the Thorny Path Ends... Full Benefits Expected in the Second Half"

[Asia Economy Reporter Kwon Jaehee] Kiwoom Securities maintained a 'Buy' rating on Lotte Tour Development on the 24th, setting a target price of 29,000 KRW.

Lotte Tour Development's first-quarter performance fell short of expectations due to the impact of Omicron. This was caused by a simultaneous decline in the occupancy rate (OCC) and average daily rate (ADR). As a result, first-quarter sales amounted to 43.1 billion KRW, with an operating loss of 27.1 billion KRW. Monthly OCC recovered to 49.8% and 52.8% in January and February respectively, but dropped again to 43.2% in March due to Omicron's impact. It rebounded to 49.7% in April. ADR showed a similar trend and is understood to be recovering after the March low. Reflecting the expansion of domestic "hokangseu" and the future impact of foreign tourists arriving in Jeju, second-quarter sales are expected to reach 63.6 billion KRW, a 159.3% increase compared to the same period last year.

Recovery of the casino is also expected from the third quarter. From June 1, the temporary suspension of visa-free entry to Jeju will be lifted, and foreign direct flight demand through Jeju International Airport is expected to increase. The international flights at Jeju International Airport, resuming after 2 years and 2 months, will start with Bangkok in early June and will be additionally connected to Singapore and others. Accordingly, gradual growth in the casino sector, which had relied only on local visitors, is anticipated. In particular, with the resumption of the Gimpo-Haneda route in June, expectations for improved air routes to Japan are high. Jeju had exchanged passenger demand with major international airports in Japan such as Narita, Osaka, and Fukuoka, so recovery expectations for the reconnection of international flights with Japan are also expected to emerge.

Namsoo Lee, a researcher at Kiwoom Securities, said, "Although China remains uncertain, gradual changes are expected from June in Japan, so considering this, recovery is anticipated in major domestic tourist destinations such as Seoul and Jeju." He added, "With the additional expansion of foreign tourists, the benefits of the world's largest Hyatt hotel and Jeju's top-class casino facilities are expected to begin in earnest."

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