Hana Securities said on the 24th that Paradise's recent hotel acquisition filing is no different from a casino expansion and that earnings could improve significantly. It raised its target price to 30,000 won from the previous 25,000 won while maintaining its "buy" rating.
On 23rd, Paradise said that Sega Sammy, a subsidiary of Paradise, finalized the acquisition of the Grand Hyatt Incheon West Tower, located right next to Paradise City. The acquisition is scheduled for 31st of next month, and the price is 210 billion won. Based on about 500 rooms, the price per room is about 400 million won.
Lee Gi-hun, a Hana Securities researcher, said, "Given that the average sale price of 4-star hotels in Seoul last year was about 400 million won and the recent boom in the hotel industry, acquiring a 5-star hotel in Incheon at a price similar to a 4-star in Seoul is very positive."
About half of the 210 billion won will be financed through borrowing, and an additional 20 billion to 30 billion won may be needed for room renovations and the future construction of a tunnel or bridge. Even assuming a 7% interest rate, the annual interest expense increase would be under 10 billion won.
As a result, Hana Securities projected that operating profit in 2027 will come in at about 280 billion won. That is a 48% increase from this year.
The researcher said, "Based on July casino sales, Lotte Tour Development exceeded Paradise City, which was because the share of comp utilization rose to as high as 50% on the back of 1,600 rooms," adding, "From that perspective, adding 500 new rooms to Paradise City's 700 rooms is very positive."
He added, "Operations could start as early as the first half of next year, but we conservatively assumed a 2027 start and will normalize next year's earnings through future updates," naming Paradise as his top pick.