DS Investment Securities said on the 2nd that Lotte Tour Development is expected to continue earnings growth as the visa-free policy and peak season coincide. It maintained a "Buy" rating and raised its target price by 30% to 30,000 won from the previous 23,000 won. Lotte Tour Development's closing price the previous day was 17,790 won.
Cho Dae-hyung, an analyst at DS Investment Securities, said, "The visa-free policy and the expansion of routes at Jeju International Airport will coincide with the peak season and lead to earnings growth through an increase in casino visitors," adding, "As monthly and quarterly seasonality is narrowing, casino revenue is possible even in the fourth quarter, which is a relative off-season compared with the third quarter."
DS Investment Securities estimated that Lotte Tour Development will post third-quarter (July–September) revenue of 196.3 billion won and operating profit of 44.7 billion won. These represent increases of 41.1% and 101.9%, respectively, from a year earlier, and operating profit is expected to beat the market consensus of 39.6 billion won.
Cho said, "Even in September, ahead of October, the biggest peak season that includes the National Day holiday, it continued its march of monthly record highs," adding, "In September, drop amount, net sales, and visitors all continued to grow from the previous month."
Despite the record September results, Cho judged that the growth potential of casino profit remains large. He said, "Currently, the share of casino users among all guests is still around 50%, suggesting ample capacity to accommodate additional visitors," adding, "This year marks the start of the phase where the casino's profit leverage is taking hold, increasing the visibility of a turnaround in net profit."