[Click eStock] "Lotte Tour Development Expected to Turn Operating Profit Positive in Q1"

Sangsangin Securities forecasted on the 15th that Lotte Tour Development will turn its operating profit positive in the first quarter of this year.

Lee Junho, a researcher at Sangsangin Securities, stated in a report on the same day, “Lotte Tour Development's sales and operating profit for the first quarter of this year are expected to be 103.4 billion KRW and 4 billion KRW respectively, representing a 120% increase and a turnaround to profitability,” and analyzed, “The reason for expecting both top-line growth and a profit turnaround is due to significant and meaningful performance growth in the casino business.”

Lotte Tour Development's cumulative casino performance from January to March recorded 70 billion KRW in revenue and 79,253 visitors. These figures represent increases of 328% and 142% respectively compared to the same period last year.

He noted, “Among the business divisions with a high sales proportion, the Jeju Dream Tower hotel business has not shown growth compared to the previous year,” but analyzed, “However, looking at the separate hotel performance before deducting sales transactions with subsidiaries, the first quarter sales this year were 26.1 billion KRW, showing an increase compared to 23.1 billion KRW in the first quarter of last year.”

He further explained, “Ultimately, the decrease in consolidated performance was largely due to the deduction of sales transactions such as comp costs. Considering that comps are used as part of marketing in the casino industry, it is reasonable at this point to regard this as a kind of CAPEX.”

He added, “In the future, when there is an overall increase in visitor numbers, it is expected that the hotel business will cover its high fixed costs and generate an operating leverage effect.”