[Click eStock] "Lotte Tour Development, 3Q Loss Expected to Continue... Target Price ↓"

[Asia Economy Reporter Hwang Yoon-joo] Kiwoom Securities announced on the 8th that although the casino performance in the third quarter is expected to improve considering the recruitment of Southeast Asian customers for Lotte Tour Development, the 2023 estimates have been downgraded. The investment opinion 'Buy' is maintained, but the target price has been lowered to 23,500 KRW.

Nam-soo Lee, a researcher at Kiwoom Securities, stated, "We expect third-quarter sales to increase by 113.1% to 63.9 billion KRW, with an operating loss of 14.3 billion KRW (continued deficit)." However, he added that a downgrade of the 2023 estimates is inevitable considering the slow recovery of Jeju international routes.

Lee explained, "Since June, with the reconnection of the Korea-Japan Gimpo route, casinos in the Seoul and Incheon areas have shown improved indicators, but the plan to resume flights to Japan from Jeju Airport has not been confirmed, so the improvement of Lotte Tour Development is slow."

Paradise achieved the recruitment of about 1,000 customers through promotions during the major holidays in Singapore, Malaysia, and Indonesia in August.

Researcher Kim said, "If we estimate the casino sales of customers recruited as travelers in August based on the average performance contribution of Chinese and Japanese VIPs at domestic foreigner casinos, it is calculated to be around 5 billion KRW per month." He added, "Therefore, considering local VIPs and the recruitment of Southeast Asian customers in August and September, the third-quarter casino performance is estimated at 22.3 billion KRW (172.0% increase), which will help improve performance along with the peak season effect in the hotel sector."

He also evaluated, "As with the previous Japanese VIP effect, continuity after reopening must be resolved. The local VIP casino performance in the first and second quarters was about 4 billion KRW per month on average."