[Click eStock] "Paradise, Q1 Earnings Surprise Despite COVID-19 Impact"

[Asia Economy Reporter Park Jihwan] Kiwoom Securities announced on the 13th that Paradise recorded a surprise in its first-quarter performance despite the impact of the novel coronavirus infection (COVID-19). It analyzed that from the third quarter, normal operations at pre-COVID levels would be possible in earnest. The investment opinion of "buy" and the target stock price of 24,000 won were maintained.

Namsoo Lee, a researcher at Kiwoom Securities, stated, "The first-quarter sales amounted to 184.7 billion won, down 8.5% year-on-year, but operating profit turned positive to 4.8 billion won, exceeding market consensus."

He said, "Strong performances in January and February raised expectations for earnings growth, but due to COVID-19, March sales fell 60% compared to the same month last year, preventing quarterly growth."

However, he explained, "It is estimated that structurally reduced comps and marketing expenses related to last year's opening, along with reduced spending for attracting foreign VIPs due to COVID-19, led cost savings and achieved an increase in operating profit."

He expected a gradual recovery in performance from the second quarter onward.

Researcher Lee said, "Paradise reopened its casino store on April 20 and achieved solid results with 25,000 VIP visitors, 56.8 billion won, and casino sales of 7.9 billion won despite only 11 days of operation in April," adding, "Even in the second quarter, when quarantine restrictions on overseas arrivals are unlikely to be lifted, the contribution of local VIPs to performance is expected to continue."

However, considering the COVID-19 situation in China and Japan, he expected the recovery of Japanese VIPs to be slower than that of Chinese VIPs. He also predicted that normal operations at pre-COVID levels would be possible only after the third quarter.

Researcher Lee said, "The growth trend of Paradise City, which grand-opened last year with aggressive marketing, depends on the recovery timing of Japanese VIPs," and added, "Considering the spread and calming of COVID-19, air exchanges with neighboring countries such as China are expected to occur first, so performance improvement is expected after the third quarter."

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