[Click e-Stock] "Lotte Tour Development Continues Solo Growth in Off-Season... Abundant Growth Momentum Through 2026"

On January 12, Kiwoom Securities analyzed that Lotte Tour Development is fueling expectations for growth momentum to continue through 2026, as the company delivered solid results in the traditionally slow fourth quarter last year. The company is maintaining its top pick status within the sector, supported by improved casino hold rates, a recovery in the travel segment, refinancing and capacity expansion, as well as the positive effects of the Korea-Japan travel ban lift.

Im Sujin, a researcher at Kiwoom Securities, stated, "Fourth-quarter results are expected to be solid, in line with consensus, as the improved hold rate offsets seasonal weakness. The weakening of December indicators is considered a temporary event-driven factor, and there is a high possibility of a rebound in January due to the baccarat tournament and increased flight capacity."

According to Kiwoom Securities, Lotte Tour Development's consolidated sales for the fourth quarter of last year are projected at 188.1 billion won, a 69.4% increase year-on-year and a 0.7% increase quarter-on-quarter. Operating profit is projected at 47 billion won, representing a significant turnaround from a loss a year earlier, and although it is down 11.2% from the previous quarter, it remains in line with consensus estimates.

Researcher Im Sujin commented, "The fact that profits in the off-season were similar to those of the peak third quarter indicates that the fundamental strength of the casino business has been elevated to a new level."

Casino revenue is expected to reach 142.8 billion won, up 61.7% year-on-year and 2.5% quarter-on-quarter. Despite a 4.1% decline in drop amount due to off-season effects, the hold rate improved by 1.4 percentage points from the previous quarter, helping to defend both revenue and profit. The travel segment is also expected to show growth, with sales of 22.1 billion won, up 48.6% year-on-year and 2.0% quarter-on-quarter, reflecting the shift of the Chuseok holiday to October.

Recently, the stock price moved sideways in the short term as December indicators fell short of market expectations, but Kiwoom Securities interprets this as a temporary, not structural, slowdown. Researcher Im explained, "The number of visitors and the hold rate remained at healthy levels, but the temporary drop in per capita drop amount weighed on investor sentiment. This decline was more attributable to event-driven factors than to weakened demand."

She continued, "The baccarat tournaments held in November and January dispersed VIP visit patterns, which appears to have temporarily lowered the per capita betting amount in December. VIP customers typically revisit about three times a year, so the timing of the tournaments led to relatively weaker December indicators, but this should not be seen as a structural slowdown." She emphasized, "With the baccarat tournament in January and increased flight capacity, there is a high likelihood of a rebound in both drop amount and per capita indicators."

In the mid-term, the possibility of refinancing is cited as a key variable. Researcher Im stated, "It is significant that the likelihood of refinancing is increasing around mid-year. If financial costs are reduced by 20 to 30 billion won annually, this will translate into improved net profit through lower non-operating expenses." She also noted that growth potential remains valid through expansion of table and operational capacity.

External conditions are also favorable. Amid a weak won, the positive impact of the Korea-Japan travel ban lift, and recovering Chinese tourist demand, the pace of demand recovery in Jeju is expected to outpace that of the mainland. Researcher Im said, "In Jeju, Chinese tourists account for about 80% of foreign visitors, so demand growth is likely to be faster than on the mainland. These regional demand characteristics are expected to support mid-term earnings visibility despite short-term indicator volatility."