DS Investment & Securities on Dec. 2 said all metrics for Lotte Tour Development grew in November, and it expects strong fourth-quarter results. It kept a Buy rating and a target price of 30,000 won. Lotte Tour Development's previous closing price was 19,710 won.
DS Investment & Securities said all of Lotte Tour Development's November metrics grew year over year. Total drop (the amount customers exchanged for chips to play games) came in at 262.8 billion won (table 235.8 billion won, machine 27.0 billion won), up 75.4% from a year earlier. The table hold rate also improved by 2.4 percentage points from the prior month to 21.2%.
Cho Dae-hyung, an analyst at DS Investment & Securities, said, "Even in the relative off-season after National Day, the monthly drop continued to exceed 250.0 billion won."
Backed by improved metrics, November casino revenue rose 96.9% from a year earlier to 51.4 billion won. Monthly visitors also grew 41.3% from a year earlier to 50,620, continuing the growth trend.
Cho said, "The customer databases are also seeing a net monthly increase of more than 4,000, bringing the total to around 117,000."
With the casino posting strong results, the fourth quarter is expected to be solid. DS Investment & Securities forecast Lotte Tour Development's fourth-quarter results at revenue of 191.3 billion won and operating profit of 55.7 billion won. Those figures represent increases of 73.9% and 2,480.1%, respectively, from a year earlier, and it expects operating profit to significantly beat the consensus (market average forecast).
Cho said, "With year-end events such as a baccarat promotion scheduled in December, casino net revenue could grow from November," adding, "We are still at the beginning of the phase where the casino's profit leverage is kicking in, and we expect net profit of 78.3 billion won next year."
It also projected that with additional international routes such as Harbin, casino visitors will continue to increase for the time being. It added that as China-Japan relations have recently worsened and Japan has imposed restrictions, there could even be expansion of air routes into Jeju International Airport.