[Click eStock] "Paradise, Possible to Escape Deficit if Japanese Routes Resume"

[Asia Economy Reporter Hwang Yoon-joo] Hana Securities forecasted on the 5th that Paradise's deficit will significantly decrease upon the resumption of the Japan route, reaching the break-even point (BEP). The investment opinion 'Buy' and the target price of 16,300 KRW were maintained.

Lee Ki-hoon, a researcher at Hana Securities, stated, "The expected sales for the third quarter have been revised upward to 171 billion KRW, a 40% increase compared to the previous year, and operating profit to 19.7 billion KRW, a 309% increase."

The researcher explained, "Sales were quite strong in August following July, positively influenced by the pent-up demand from Japanese VIPs and supply recovery due to the route resumption."

In particular, in September, both countries removed the pre-entry PCR testing requirement, and Korea expanded its existing visa-free policy for Japanese entrants from August to October.

Lee said, "From the perspective of diplomatic reciprocity, there is hope that discussions on mutual visa-free policies will resume in October to November," adding, "Although the annual deficit has been revised upward to -12.4 billion KRW based on this data, the recovery speed is quite steep enough to approach the annual BEP depending on performance."

Paradise's sales in August recorded 50.8 billion KRW, a 15% decrease compared to the previous year. However, it is evaluated that the base effect of a 31.6% hold rate during the same period last year should be considered.

The researcher diagnosed, "The drop amount grew 80% year-on-year to 331.4 billion KRW, and the hold rate was 14.5%. Especially, the drop amount from Japanese VIPs increased by 77% quarter-on-quarter to 131 billion KRW, continuing the improved trend since the resumption of the Gimpo-Haneda route."

He emphasized, "Despite the still limited route resumption and visa restrictions, surprises continue due to the increase in drop amount per person. Considering the expansion of the Busan-Japan route and the possibility of resuming the Jeju-Japan route within the year, a larger and faster recovery than expected may occur."