NH Investment & Securities assessed on the 25th that both the performance and investment sentiment for Lotte Tour Development have entered an improvement phase.
NH Investment & Securities newly proposed a buy investment opinion for Lotte Tour Development and set a target price of 23,000 won, which is 42% higher than the previous closing price.
Eui-Hwa Jeong, an analyst at NH Investment & Securities, noted, "The increase in visitors due to the easing of South Korea-China relations and growth in indicators for high rollers will drive performance growth through the generation of operating cash flow and the reduction of financial costs."
He added, "The mass (general customer) proportion within Lotte Tour Development's casino drop amount (total amount of cash converted into chips by customers) is about 80%, but a recent uptick in high roller visitor influx has been confirmed. If the proportion of high rollers expands in the future, the leverage effect due to the increase in expenditure per person is expected to become visible."
Concerns regarding overhang related to convertible bonds (CB) are expected to resolve within the year, improving investment sentiment.
The analyst said, "The 6th series CB is still considered unconverted despite passing the conversion deadline (August 21)," adding, "There will likely be attempts to reduce interest costs through refinancing within the year."
Additionally, he remarked, "The remaining convertible amount of 5.97 million shares (7.5%) is expected to be converted by November," and stated that the likelihood of overhang arising from additional funding due to improved operating conditions is low.