[Click eStock] "Paradise, Full-Scale Earnings Recovery Starting in the Second Half"

[Asia Economy Reporter Kwon Jaehee] Kiwoom Securities maintained a 'Buy' rating on Paradise on the 20th, setting a target price of 22,500 KRW.

Paradise's Q1 performance this year recorded sales of 99.7 billion KRW and an operating loss of 25.5 billion KRW due to the impact of Omicron. Sales fell 46% compared to the same period last year. For Q2, with the lifting of social distancing measures, sales are expected to slightly improve to 107.8 billion KRW and an operating loss of 17.9 billion KRW.

The non-casino segment has grown compared to 2019, acting as a key factor in defending the downside of sales, and cost efficiency efforts initiated since last year have led to a reduction in losses. Additionally, local VIP casino sales centered on the Korean diaspora market continue. With the expansion of domestic leisure demand, the hotel segment's growth is prominent, and flexible performance improvement is expected to be supported after the re-entry of foreign VIPs.

From the second half of the year, a full-scale performance recovery is anticipated. From July to the end of the year, international scheduled flights are expected to expand aiming for a 50% recovery compared to pre-COVID-19 levels. Therefore, the second half is expected to benefit from the summer vacation season in Q3 and the resumption of foreign arrivals. However, the re-entry of China and Japan is expected to be limitedly decided after Q4, so full-scale growth is likely to begin from the end of the year.

Japan announced quarantine easing from May 17th, exempting 3-day quarantine upon entry for those who have received three doses of the Korean vaccine. From June 1st, visa-free entry for foreigners to Jeju Island and Yangyang will be allowed, including Chinese tourists in Jeju. However, since March 2020, the 90-day visa-free entry between Korea and Japan has been suspended, and China still requires 10 to 14 days of quarantine upon local entry, so it is expected to be difficult to enjoy the VIP effects from China and Japan until full quarantine easing is achieved.

Namsoo Lee, a researcher at Kiwoom Securities, analyzed, "Until Q2, casino sales driven by local VIPs and the reopening effect of the hotel segment are expected to lead performance," adding, "From the second half, expectations for performance recovery are high due to increased casino visitors from the summer vacation and year-end peak season effects, as well as Japan's easing of entry restrictions."

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