Hana Securities noted that the performance of Lotte Tour Development is sharply increasing, making it a top pick in the casino industry as of the 6th. Hana Securities maintains a 'buy' investment opinion on Lotte Tour Development and raised its target price from 21,000 won to 23,000 won.
Lee Gi-hun, a researcher at Hana Securities, sees the potential for Lotte Tour Development's market capitalization to rise to as much as 3 trillion won in the medium to long term. This is twice the current market capitalization.
This is thanks to growth in performance. The proportion of casino operations using rooms at Lotte Tour Development's Jeju Dream Tower Hotel (Grand Hyatt Jeju) increased from about 30% in the first quarter (January to March) of this year to around 50% in July, boosting performance. This researcher noted that if 65% of the hotel rooms are used for casino operations, monthly casino revenue could reach the early 50 billion won range.
Adding effects from factors such as drop amounts per person (the total amount customers converted cash into chips) could lead to average monthly sales expectations of 60 billion won, according to this researcher. He said, "If annual casino revenue is about 720 billion won, then considering contribution margin, the annual operating profit could exceed 250 billion won and net profit could exceed 150 billion won."
With Lotte Tour Development returning to positive net profit for the first time since the opening of the Dream Tower in the second quarter (April to June) of this year, this researcher forecasts that the improvement in performance will continue in the short term.
This researcher indicated, "Since sales in July of this year also recorded the highest ever, the forecast for annual operating profit this year is 119 billion won," adding that this is approximately 70% higher than the earlier forecast (70 billion won).