[Click e-Stock] Lotte Tour Development Posts Strong Q2 Results... Target Price Raised

On July 24, Eugene Investment & Securities raised its target price for Lotte Tour Development to 23,000 won, citing expectations of record-high earnings in the second quarter of this year, driven by the largest-ever number of casino visitors.

Lee Hyunji, a researcher at Eugene Investment & Securities, projected, "Lotte Tour Development's revenue in the second quarter will reach 158.1 billion won, and operating profit will amount to 27.8 billion won, representing year-on-year increases of 36.2% and 372.0%, respectively, and meeting the heightened market consensus."

The growth of the casino segment was particularly notable. The number of casino visitors in the second quarter is expected to reach 150,000, up 71.3% year-on-year, while the drop amount is projected to hit a record-high of 668.5 billion won, a 63.0% increase compared to the same period last year.

Lee Hyunji assessed, "It is positive that the number of visitors has continued to increase every month since January, and in particular, May marked the first time that the monthly visitor count reached 50,000." She added, "It is also encouraging that in June, despite having one fewer business day and no holidays compared to May, the number of visitors still increased."

The hotel segment is also demonstrating solid demand. The average occupancy rate (OCC) in the second quarter rose to a level comparable to Macau, confirming a market recovery. Accordingly, the third quarter, which coincides with the peak season in the second half, is also expected to maintain a positive performance trend.

Lee Hyunji explained, "Since the majority of casino visitors are Chinese and the business is based on the mass segment, the expansion of new routes to Greater China and the allowance of visa-free entry will drive an increase in inbound Chinese visitors." She further stated, "This will be a key driver of earnings in the second half of the year."

Additionally, with the anticipated increase in net profit in the third quarter, the possibility of early refinancing has been mentioned, raising financial expectations. Although the conversion of convertible bonds (CBs) has been ongoing due to the recent rise in share price, analysis suggests that there remains more than 30% upside potential compared to the current share price, even after accounting for the conversion of the remaining volume.