Heungkuk Metaltech Securities said on the 4th that as the government is pushing to revise the law to raise the cap on the Tourism Promotion and Development Fund burden rate for foreigner-only casino operators from 10% to 15% of revenue, in the case of Lotte Tour Development(032350), the scale of profit reduction will be limited compared with the market's preemptive concerns. It maintained a Buy rating and lowered the target price to 20,000 won. Lotte Tour Development's closing price the previous day was 13,390 won.
Heungkuk Metaltech Securities analyzed that, regarding the law revision on the Tourism Promotion and Development Fund, if the method of imposing a 5 percentage point (p) increase on the portion exceeding 300 billion won per establishment is adopted, it would be disadvantageous to Lotte Tour Development, whose revenue is concentrated in a single venue compared with other companies operating multiple establishments.
However, it viewed the scale of the profit reduction as limited. Song Ji-won, an analyst at Heungkuk Metaltech Securities, said, "Even if the revision takes effect, it would reduce the estimated operating profit for 2027 by 7.6%," and added, "Compared with the market's preemptive concerns, the scale will be limited."
Lotte Tour Development's revenue in the second quarter of this year rose 28.9% year over year to 203.3 billion won, and operating profit increased 56.8% to 51.9 billion won, meeting market expectations.
Song said, "By segment, casino growth stood out the most, driven largely by a high hold rate (the share of money the casino keeps by winning games) and the acquisition of new member customers."
In the second quarter, casino drop (the amount customers exchanged for chips to play) rose 13.8% to 760.6 billion won, the hold rate increased 2.9 percentage points to 19.3%, and visits climbed 23.2% to 182,872.
In particular, daily revenue per table (WPUPD) grew significantly to 11.63 million won, up 16.1% from the previous quarter.
Song said, "Lotte Tour Development has 167 tables, about 45% of Macau's average, but as of 2025, annual gross gaming revenue (GGR) still remains around 17%," adding, "This productivity gap relative to the number of tables is Lotte Tour Development's growth potential."
It forecast that performance will continue to sail smoothly in the second half. Song said, "Additional machines were introduced in the first half, and poker tables were expanded," and added, "Cities with international flights to Jeju are also expected to expand to 26 in the third quarter as six routes, including Qingdao, Changchun, Wuhan, Changsha and Chengdu, are added."