[Click eStock] "Lotte Tour Development, Potential Shown in December... Solid 4Q Performance Last Year"

[Asia Economy Reporter Ji Yeon-jin] Kiwoom Securities announced on the 13th that it maintains a buy rating and a target price of 29,000 KRW for Lotte Tour Development, expecting that the casino and hotel will improve simultaneously once the travel bubble and Chinese VIP entries resume.

Lotte Tour Development's operating revenue for the 4th quarter is expected to increase by 1999.7% year-on-year to 43.4 billion KRW. However, operating losses are projected to continue at 17.3 billion KRW, falling short of market expectations.

The hotel division recorded 29.6 billion KRW, a 33.5% increase compared to the 3rd quarter. Since social distancing was raised to level 4 from October last year, limiting room operations to 77%, and the second tower opened late on November 29, this performance is considered relatively strong. The casino, which is a core part of consolidated sales, also showed a pattern linked to room operation status, and is expected to record sales of 9.6 billion KRW, a 17.6% increase from the 3rd quarter.

In particular, although the travel and leisure business was expected to slump last month due to the impact of the COVID-19 Omicron variant, year-end overseas travel demand was replaced by domestic travel, benefiting Jeju Island, the largest travel destination in Korea. As of December, the hotel recorded 11.5 billion KRW and the casino 8.2 billion KRW, and the hotel, which began operating all 1,600 rooms from November 29, showed a room occupancy rate exceeding 50%.

Namsoo Lee, a researcher at Kiwoom Securities, said, "With the opening of the second tower, the company's cost structure is expected to reduce volatility further, showing a continuous trend of loss reduction due to sales improvement," adding, "The domestic travel return trend seen in December is a valid momentum at least until early Q2, considering the resumption of flight routes and overseas travel lead times."

Hotel sales exceed 40 billion KRW per quarter, and operating losses on a consolidated basis are expected to shrink to 3.2 billion KRW in the first quarter of this year.

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