DS Investment & Securities said on the 11th that profits at Lotte Tour Development are expected to increase as Jeju enters peak tourist season. It maintained a "buy (BUY)" investment opinion and raised the target price to 33,000 won from 30,000 won. The previous trading day's closing price of Lotte Tour Development was 18,700 won.
According to DS Investment & Securities, profits at Lotte Tour Development are increasing even during the tourism off-season. Casino revenue is determined by the drop amount (the amount customers exchange for chips to play) and the hold rate (the percentage of money the casino recovers by winning games), and last month Lotte Tour Development's total drop amount and hold rate both rose.
Jo Dae-hyung, an analyst at DS Investment & Securities, said, "Even last month, a relative off-season for Jeju tourism, casino revenue increased year over year, extending the year-over-year growth trend for 12 consecutive months," and noted, "Monthly visitors are also maintaining growth at 43,914, up 25.2% from a year earlier."
Growth is expected to continue this month as the tourism peak season begins. Jo said, "March deserves attention as it is set to rebound with the start of Jeju's peak tourism season," and added, "Given that 'Baccarat Day,' held every other month, takes place this month, there is a high chance net revenue will again exceed 40 billion won starting this month."
Jo forecast Lotte Tour Development's revenue and operating profit this year at 76.2 billion won and 19.9 billion won, respectively. Jo said, "With more than 500 rooms still available for casino patrons, profit leverage is likely to continue for the time being," and added, "Additional reductions in financial expenses from refinancing can also be expected, so estimates are likely to be revised up."