[Click eStock] "Lotte Tour Development, Performance Bottom Passed... Jeju Visa-Free Effect"

Kiwoom Securities analyzed on the 3rd that Lotte Tour Development has passed the bottom in terms of performance and that the Visa Free effect in Jeju Island is about to take full effect.

Namsoo Lee, a researcher at Kiwoom Securities, stated in a report on the same day, “We expect 2Q sales of 73.4 billion KRW and an operating loss of 10.1 billion KRW, in line with consensus,” and predicted that “the effect of the expansion of international flight connections at Jeju International Airport will be prominent.”

For the casino, the drop amount is expected to be 342.8 billion KRW and sales 32.0 billion KRW in May, influenced by Golden Week and Labor Day. These figures represent increases of 251% and 161% respectively compared to the previous year. The hotel sector is analyzed to be recovering from adverse factors such as bad weather in Jeju in the previous quarter and domestic travelers switching to overseas travel, showing the effect of increased foreign visitors to Jeju Island. Accordingly, the OCC, which was only 36.5% in 1Q, is expected to improve to a quarterly high of 55.7%. Non-casino sales are also improving, with hotel sales at 25.6 billion KRW and travel sales at 13.8 billion KRW.

Researcher Namsoo Lee explained, “The number of international flights at Jeju International Airport, which averaged 1,461 flights per month in 2019, recovered to 606 flights in May, a 41% recovery,” and added, “Compared to the 2019 monthly average, the recovery rate of arrivals in Jeju is 39% for all foreigners as of June (143,000 → 55,000 people) and 19% for Chinese visitors as of April (90,000 → 17,000 people).”

He analyzed, “As a result of the expansion of overseas routes, the reflection of increased air tickets has accelerated since April, and from June, many Chinese airlines departing from China are planning to resume flights,” and added, “Considering the population size, it is difficult to expect a significant outbound effect from domestic travelers in Jeju, so the entry of foreign airlines to Jeju mainly serves to transport overseas travelers from their home countries.”

Accordingly, he forecasted, “The foreigner hotel occupancy rate of Lotte Tour Development is expected to improve from 23% in 1Q to about 50% in 2Q,” and stated, “The increase in foreigner hotel occupancy naturally leads to improved casino traffic. Although it is difficult to predict the official resumption schedule of Korea-China group tours, the resumption of expanded Chinese airline flights to Jeju after June will lead to an expansion of FIT using the visa-free travel area.”

Furthermore, he added, “If the hold rate stability observed in April and May through increased traffic continues and monthly net sales of about 15 billion KRW can be achieved through the effect of Chinese airlines’ Jeju flights in July, it will lead to a turnaround to operating profit on a consolidated basis.”

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