Paradise: Revenue Recovery Depends on the Resumption of Air Routes

[Asia Economy Reporter Park Jihwan] Meritz Securities emphasized on the 11th that the resumption of air routes, which were closed due to the impact of the novel coronavirus disease (COVID-19), is the only necessary condition for Paradise's revenue recovery. The target stock price was lowered by 16.7% from the previous 24,000 KRW to 20,000 KRW.

According to Meritz Securities, Paradise's drop amount (the amount of cash converted into casino chips) in March was 128.9 billion KRW, down 75% year-on-year, and revenue was 19.7 billion KRW, down 61%. The drop amount and revenue for the first quarter were 1.16 trillion KRW and 155.2 billion KRW, respectively, down 24.1% and 3.8% compared to last year. Due to strong operations until February and government support for hotel labor costs, the operating profit for the first quarter is expected to hold steady at 1.7 billion KRW.

Researcher Lee Hyojin of Meritz Securities forecasted, "With the full effect of the foreigner entry ban and the shutdown of casino operations, the casino revenue growth rate in April will worsen to minus 84% compared to the previous month, forming a bottom."

However, if the air routes reopen, revenue recovery is just a matter of time. In particular, the timing of improvement depends on the measures for Korean entrants from China and Japan. Assuming that measures for business demand from the two countries will be eased from June, if annual casino revenue decreases by 26%, the consolidated operating loss for this year is expected to be 73.4 billion KRW.

Researcher Lee Hyojin evaluated, "If the air travel restrictions are resolved, sales will normalize fastest among related industries," adding, "As of the end of last year, they hold more than 300 billion KRW in cash, and depreciation is only an accounting cost of 100 billion KRW annually, so funding issues are also unfounded."

This content was produced with the assistance of AI translation services.