[Click eStock] "Paradise, Need to Confirm Recovery of Chinese VIPs Next Year... Target Price Down"

Target Price Revised Downward by 13% Compared to Previous Level

Daishin Securities on the 13th downgraded the target price for Paradise from 16,000 KRW to 14,000 KRW, stating that it is necessary to confirm the recovery trend of Chinese VIPs next year. The investment opinion was maintained as 'Buy.'

Im Su-jin, a researcher at Daishin Securities, explained, "From a conservative perspective, we lowered the future estimates for Chinese and other VIPs, reducing the target price by 13% compared to the previous level. Even during the peak season of China's National Day in October, the effect was disappointing as it did not show the same impact as before COVID-19. Unlike the average growth of 54% in 2018 and 2019, this year showed a sluggish growth of about 19%."

Paradise's Q3 performance this year recorded consolidated sales of 268.2 billion KRW, down 6.1% year-on-year, and operating profit of 36.2 billion KRW, down 36.6%, in line with consensus (average securities firm forecasts). Researcher Im analyzed, "The drop amount (the amount casino customers exchanged for chips) grew by 4.1% quarter-on-quarter to 1.77 trillion KRW, but the hold rate (net sales/drop amount) fell by 1.8 percentage points, causing casino net sales to fall short of our estimates. In Q3, the number of visitors from China, Japan, and other VIPs grew evenly, recording 3.7%, 3.6%, and 3.4% quarter-on-quarter, respectively." He added, "Notably, the growth trend in Japan continues, with the Q3 Japanese VIP drop amount reaching a record high of 765.8 billion KRW."

Daishin Securities expects Paradise's sales next year to increase by 9.9% year-on-year to 1.2 trillion KRW, and operating profit to rise by 12.6% to 168 billion KRW. It is noted that the recovery of Chinese and other VIPs is important next year. "Japan VIPs, where strengths are shown, continue to grow favorably due to expanded marketing, which is positive, but other regions are recovering slowly, and marketing expenses are increasing due to the emergence of the new casino, Inspire. It is a time when confirmation of the recovery trend of Chinese and other VIPs is necessary," the report stated.