Kiwoom Securities on the 21st downgraded the target price of Paradise to 20,500 KRW, citing reasons such as the adjustment of sales estimates for the Walkerhill branch and increased customer acquisition costs for the new casino integrated resort. The investment opinion was maintained as a buy.
Namsoo Lee, a researcher at Kiwoom Securities, stated, "We adjusted the unusual sales of the Walkerhill branch in the 2nd and 3rd quarters of 2023 from our estimates and lowered the earnings forecast due to increased competitive marketing and casino customer acquisition costs for the new casino integrated resort. However, although slow, the recovery of demand from Chinese VIPs could occur at any time, so there is also an upside point prepared."
Paradise recorded sales of 992.4 billion KRW and an operating profit of 145.8 billion KRW last year. It was the best performance since its establishment, with all sectors including casinos, integrated resorts, and hotels performing well.
This year as well, it is expected that, thanks to strengths in Japanese VIPs, normalization of the integrated resort, and solid performance in casinos and hotels, Paradise will be able to maintain the most stable business activities compared to competitors, continuing from last year.
Researcher Namsoo Lee analyzed, "Among foreigner casino peers, Paradise is highly likely to achieve the highest operating profit. However, in 2024, the slower-than-expected recovery of demand from Chinese VIPs and competition with the new casino integrated resort in Yeongjongdo remain risk points."
Kiwoom Securities forecasted Paradise's sales this year to be 1.0629 trillion KRW and operating profit to be 132.2 billion KRW.
He added, "With the opening of Inspire Resort's casino, aggressive marketing efforts are expected to shorten the ramp-up period, increasing the likelihood of a carnival for P City hotel and casino. The role of P City, which accounts for half of the company's performance, is important."
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