Hanwha Investment & Securities analyzed on the 3rd that, ahead of the peak season, the casino performance continues to improve and the interest burden has eased as convertible bonds are exercised. It raised the target price from the previous 18,000 won to 24,000 won, an increase of 33.33%, and maintained the investment opinion of 'buy'. The closing price of Lotte Tour Development on the previous trading day was 17,400 won.
Lotte Tour Development's casino sector showed strong performance last month despite not being the peak season. The number of visitors to the Jeju Dream Tower Casino in June and the drop amount (the money spent by customers to buy chips in table games) recorded 51,515 and 241.7 billion won, respectively, breaking the previous month's record for the second consecutive month.
Park Soo-young, a researcher at Hanwha Investment & Securities, said, "The net sales amount was 35.8 billion won, a decrease from the previous month due to a lackluster hold rate (the proportion of money won by the casino in games) on some trading days, but it is positive that both the drop amount and visitor indicators showed improvement despite the somewhat unfavorable 30 operational days."
The number of direct flights connecting the mainland and Jeju was slightly reduced from about 1,251 in May to about 1,230 in June, while the number of flight passengers increased to about 198,000 from 195,000 during the same period. Park noted, "The steady flow of tourists from China to Jeju is leading to strong indicators for visits to the Jeju Dream Tower Casino."
He also emphasized, "Last year, the connectivity with the mainland was better in the second half than in the first half, and since the Dream Tower Casino recorded the best performance in August, we expect good results for July and August this year."
Hanwha Investment & Securities analyzed that although Lotte Tour Development's stock price has surged 127% compared to the beginning of the year, there is still potential for further increase. Park said, "As the stock price rises, some of the held convertible bonds will be converted, which raises concerns about dilution due to the increase in circulating quantity, but the expectations for improvement in net income (NI) due to eased interest burden are greater."
He added, "Even conservatively, we should be able to see a quarterly NI turnaround next year."