[Click eStock] "GKL, Clear Earnings Improvement... New Target Price Set at 17,000"

MASS and VIP Expected to Recover Starting This Summer
If Performance Improves, Stock Price Will Also Recover
Recovery of Chinese MASS and VIP Is Key

Daishin Securities on the 17th newly issued a 'Buy' investment rating and a target price of 17,000 KRW for GKL. They forecast continuous improvement in earnings and a recovery trend in the stock price. GKL's closing price on the previous trading day was 13,060 KRW.

Im Sujin, a researcher at Daishin Securities, said, "Despite the allowance of group tours from China last year, GKL's stock price showed sluggish performance due to slower-than-expected VIP recovery," adding, "In the first quarter of this year, the expansion of Chinese routes and the inbound recovery are gaining momentum, indicating that environmental factors are normalizing." She continued, "Starting from the summer peak season, MASS recovery is expected to accelerate, and VIP recovery will follow as the Chinese economy improves," and "Future earnings are expected to continuously improve, leading to a recovery trend in the stock price." In the casino industry, VIP refers to 'big spenders' with high drop amounts (the amount customers exchange for chips), while MASS refers to general customers with lower drop and betting amounts.

This year, Chinese inbound tourism is expected to recover significantly. Given GKL's geographic advantages in Gangnam and Yongsan and its historically high proportion of Chinese customers, a sales recovery centered on MASS is expected to gain momentum. Researcher Im said, "As the most important factor, the continuous increase in visitor numbers suggests a high likelihood that sales growth will accelerate once hold rates normalize."

GKL's operating performance for 2024 is expected to be 442 billion KRW in sales and 78 billion KRW in operating profit. With the full-scale recovery of Chinese MASS, sales growth is anticipated, and the business structure with a high proportion of fixed costs is expected to amplify the leverage effect. The leverage effect is expected to significantly improve operating profit.