[Click eStock] "Paradise, COVID demand decline recovered but earnings shock... target price down"

Target Price Lowered by 7% Compared to Previous Level

Hyundai Motor Securities on the 19th lowered the target price for Paradise from 14,000 KRW to 13,000 KRW, reflecting an earnings shock in the fourth quarter of last year. The investment rating was maintained as 'Buy.'

Hyun-yong Kim, a researcher at Hyundai Motor Securities, explained, "The target price was lowered by 7% compared to the previous one," adding, "The downward revision of the target price is due to the earnings shock, which led to a downward revision of the profit forecast by the same margin."

Paradise recorded sales of 265.8 billion KRW in the fourth quarter of last year, up 9.9% year-on-year, and operating profit of 19.5 billion KRW, up 32.1%. Researcher Kim analyzed, "The earnings significantly missed the consensus (average forecast by securities firms)," adding, "Although casino sales increased by 14.8%, the growth rate of other businesses slowed, resulting in a 9.9% increase in total sales. The leverage effect from increased sales and a cost-efficiency policy continued, leading to an improvement in operating profit compared to the same period last year."

It is analyzed that the demand decline due to COVID-19 is recovering. Researcher Kim said, "The drop amount (the amount casino customers exchanged for chips) in the fourth quarter was 1.662 trillion KRW, down 0.2% year-on-year. The decrease of 6.1% in Japanese VIP and 1.5% in Chinese VIP was offset by a 20.1% increase in other VIPs," adding, "The annual drop amount last year was 6.8684 trillion KRW, up 11.3% year-on-year, already exceeding the 2019 drop amount of 6.4533 trillion KRW, which means the demand decline caused by COVID-19 has fully recovered."

The drop amount in January recorded 579.2 billion KRW, an increase of 1.8%. Researcher Kim explained, "Chinese VIP increased by 6.9%, Japanese VIP by 4.9%, and mass customers (general customers) by 0.9%, while other VIPs sharply decreased by 9.0%," adding, "Sales decreased by 2.3% during the same period, which was due to the hold rate (net sales/drop amount) decreasing by 0.4 percentage points to 11.4% compared to the same month last year."