Hanwha Investment & Securities on the 24th said that the expansion effect of the Hyatt soft opening in March next year will be confirmed in earnest in May, because Japan's Golden Week and China's Labor Day follow one after another.
At the same time, it maintained a target price of 28,000 won and a "buy" rating. Paradise closed at 18,090 won in the previous trading day.
There are no major events in November and December this year, and as the market enters a relative off-season, expectations for casino results are not high. However, looking only at the two weeks in November, indicators for Japanese guests, which appeared somewhat sluggish in September–October, showed some recovery. Also, indicators for newly incoming Chinese guests in October remained solid in November.
Park Su-young, an analyst at Hanwha Investment & Securities, said, "Considering one-off expense issues such as the temporary recognition of deferred annual labor cost increases in the fourth quarter and one-time marketing expenses, it is still hard to have high expectations for fourth-quarter operating profit." However, solid topline results are expected, including partial recovery in Japanese indicators and the inflow of new Chinese VIPs.
The Hyatt soft opening will begin operations on Mar. 8 next year. The existing delegated operation contract for the Grand Hyatt expires on the 1st of the same month, and from the soft opening, Paradise will operate it directly. The construction of the bridge connecting P-City and the Hyatt is expected to be somewhat delayed due to design issues.
Park said, "After the Hyatt opens, the capacity for comps will expand, and by easing the criteria for hotel comps (Comp, rewards offered to casino customers) compared with before, it can drive solid growth in casino drop (the amount customers exchange for chips to play) and revenue."
She added, "The business expansion effect can be confirmed in May next year, when Japan's Golden Week and China's Labor Day coincide."