[Click e-Stock] Lotte Tour Development Expected to Post Record-High Q2 Results on Dream Tower Brand Strength

On July 14, Yuanta Securities projected that Lotte Tour Development would achieve its highest-ever quarterly results in the second quarter of this year, driven by the brand competitiveness of Dream Tower.

Lee Hwanwook, a researcher at Yuanta Securities, stated in a report released the same day, "Second-quarter revenue this year is expected to reach 153.1 billion won, up approximately 32% from the same period last year, and operating profit is projected to surge more than fourfold year-on-year to about 27.8 billion won, setting a new quarterly record."

This strong performance is attributed to two main factors: the recovery in the number of Chinese tourists following the improvement in Korea-China relations, and a sharp increase in Dream Tower visitors. Notably, the casino segment delivered outstanding results. In the second quarter of this year, the number of casino visitors soared by about 71% year-on-year to 148,475. Additionally, from April to June, an average of about 4,500 new membership members were added each month, pushing the total number of members in the second quarter to over 94,000.

The casino’s total drop amount (the total amount customers wagered on games) reached a record high of approximately 668.5 billion won, with the drop amount per person also at about 4.5 million won. Although the hold rate (the ratio of casino revenue to drop amount) fell by 1 percentage point from the previous quarter to 16.5%, net casino revenue still surpassed 110 billion won, marking another all-time high.

Lee Hwanwook commented, "Market share expansion is progressing smoothly as Dream Tower's brand recognition rises, positioning the company to continue benefiting the most from the improvement in Korea-China relations." He added, "Market share, which stood at 69.6% at the end of last year, had risen significantly to 77.4% as of the end of May this year."

However, compared to the first quarter of 2016, before the THAAD incident, the recovery rate of foreign tourists visiting Jeju is still only around 62%, and the number of flights between Jeju and China remains at about 55% of previous levels, indicating ample room for further recovery.

In addition, only 105 out of 166 tables are currently in operation, suggesting that more tables can be opened in the future. The presence of a hotel with 1,600 rooms and the ongoing trend of raising minimum betting amounts also create a favorable environment for continued performance improvement. As a result, annual revenue this year is expected to reach approximately 622.6 billion won, up about 32% from the previous year, and operating profit is projected to increase about 2.6 times year-on-year to around 100.9 billion won.

Lee Hwanwook stated, "We are maintaining our buy recommendation and raising the target price to 23,000 won," adding, "This reflects the upward revision of profit estimates for 2025-2026 and an increase in the multiple from the previous 13.9 times to 14.3 times."