Report from Kiwoom Securities
Kiwoom Securities diagnosed on the 11th that the performance fundamentals of Paradise are strengthening. Accordingly, they maintained a buy rating and a target price of 23,500 KRW.
Namsoo Lee, a researcher at Kiwoom Securities, stated, “There has been a balanced improvement across all sectors, including casino performance recovery centered on Japanese VIPs and hotels that have dispelled concerns about overseas travel,” adding, “The performance improvement of the Yeongjongdo integrated resort is remarkable, and we expect the establishment of a virtuous cycle structure between the casino and hotel.”
The day before, Paradise recorded sales of 191.5 billion KRW and an operating profit of 19 billion KRW in the first quarter. Compared to the same period last year, sales increased by 92%, and operating profit turned positive, meeting consensus. Performance improved in all sectors with casino at 71 billion KRW, integrated resort at 91.3 billion KRW, and hotel at 25.3 billion KRW. In particular, operating profits for the casino and integrated resort were solid at 4.8 billion KRW and 9.8 billion KRW, respectively.
Lee said, “Although operating and variable costs increased along with sales growth, the increase was limited to 38% compared to the same period last year, maintaining the trend of turning operating profit positive,” and added, “Hotels, which had concerns about outbound overseas travel, contributed to profit improvement as both the occupancy rate and average daily room rate (ADR) exceeded pre-COVID-19 levels.”
In April, the drop amount was 516.8 billion KRW, and VIP visitors numbered 105,000, increasing by 318% and 240%, respectively, compared to the same month last year. Casino net sales rose 216% to 54.5 billion KRW, indicating that the pent-up demand for casinos is still ongoing. Especially since last December, the average monthly VIP visitors have been 56,000 from Japan and 34,000 from other countries. This corresponds to 84% and 52% of the average monthly VIP visitors in 2019, respectively.
He forecasted, “P City, which has strengths in attracting Japanese VIPs, is playing its role, and the inflow of other VIPs due to the expansion of international flights is also occurring, so the trend of performance improvement is expected to continue.”
He continued, “Another key to performance growth this year is the resumption of attracting Chinese VIPs, which will gradually recover starting from the May Labor Day holiday due to the expansion of international scheduled flights,” adding, “The recovery speed of attracting Chinese VIPs is quite important as it can create a virtuous cycle including contributions from non-casino sectors such as hotels.”
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