Eugene Investment & Securities on the 14th said Lotte Tour Development(032350) has strong earnings and industry conditions, and maintained a "Buy" rating. However, it lowered the target price to 22,000 won, factoring in concerns about a tax rate hike. Lotte Tour Development's previous closing price was 12,810 won.
Lotte Tour Development posted second-quarter revenue of 203.3 billion won and operating profit of 51.9 billion won. Those figures rose 28.9% and 56.8%, respectively, from a year earlier, in line with market consensus (average forecast).
In particular, second-quarter casino revenue rose 33.7% on-year to 147.1 billion won, the highest ever, with about 49.0 billion won in average monthly net sales.
Lee Hyun-ji of Eugene Investment & Securities said, "April had neither holidays nor a baccarat tournament, and it had one fewer business day than January and March, yet daily visitors topped 2,000, logging the fourth-highest net sales on record," adding, "In May, the Golden Week effect brought a record 63,192 visitors, driving results, and in June, demand of more than 60,000 visitors was sustained through the Dream Tower Casino 5th anniversary baccarat tournament, delivering solid results."
Second-quarter drop amounted to 760.6 billion won, and casino visitors totaled about 180,000.
The analyst said, "Since May, more than 60,000 visitors have consistently come each month, keeping demand steady, while monthly net additions to membership have been steadily rising," adding, "New membership customers in July are estimated at about 5,600, and it is encouraging that genuine customers are expanding."
Second-quarter travel institutional sector revenue rose 25.4% to 30.1 billion won, hotel institutional sector second-quarter occupancy (OCC) was 88.3%, and average daily rate (ADR) was 262,000 won.
In particular, the analyst said, "Macau has seen two straight months of year-over-year declines in gross gaming revenue (GGR) in June and July, but Lotte Tour Development held up better than Macau and, despite the World Cup in July and the monsoon, recorded the second-highest net sales ever," adding, "In August, peak season, a baccarat tournament is also being prepared, so growth is expected to be much more solid than in July, and another record quarterly high is expected in the third quarter."