Yuanta Securities Korea projected on the 23rd that PARADISE would see improved performance and investment conditions due to the temporary no-visa entry measures for group tourists from China in the third quarter. Amid a slower-than-expected recovery of Chinese tourists, which have decreased due to the THAAD incident and the coronavirus disease (COVID-19), there are expectations that a significant influx of Chinese tourists will occur starting in the second half of this year. The target stock price is 16,000 won, and the investment opinion is 'buy.'
PARADISE's sales for the first quarter of this year were 283.3 billion won, and the operating profit was 57.3 billion won. This represents increases of 7% and 18.3%, respectively, compared to the same period last year, exceeding market expectations (consensus). Despite a decline in drop amount (the cost spent by casino visitors on chips), the hold rate (the proportion of the amount recouped by the casino through games) at major locations increased.
By location, Walkerhill recorded net sales of 95.4 billion won, representing a 13.9% increase compared to the same period last year. Although the drop amount decreased by 2.5%, the hold rate rose by 13.4%. The number of Chinese VIP visitors continued to recover, but the drop amount per capita for VIPs from Japan and other countries decreased.
PARADISE CITY's net sales were 108 billion won, a 5.3% increase compared to the same period last year. During this period, both drop amounts and hold rates increased, and visitor numbers from most countries, except Japan, rose evenly.
Starting from July to August, the no-visa entry for Chinese group tourists is expected, and strong performance is anticipated. Lee Hwan-wook, a researcher at Yuanta Securities Korea, noted, "In Macau, the average number of Chinese tourists in the first quarter was 110,000 per day, contributing an average of 100 billion won to game revenue a day," adding that "Conversely, the average number of Chinese tourists visiting Korea is only around 12,000 per day."
The increase in Chinese tourists is expected to lead to an increase in casino revenue. The recovery rate of Chinese tourists visiting Korea in the first quarter is 84% compared to the pre-COVID-19 era, and only 67% compared to before the THAAD incident. Since group tourists tend to lead to higher hold rates, widespread overall growth is also considered possible.