[Click eStock] "Lotte Tour Development Anticipates VIP Growth... Target Price Set at 27,000 Won"

On October 14, Kiwoom Securities analyzed that Lotte Tour Development recorded results in the third quarter that significantly exceeded market expectations, and projected continued performance growth through next year and 2026. The investment opinion was set at 'BUY,' with a target price of 27,000 won.

Im Sujin, a researcher at Kiwoom Securities, stated, "Third-quarter revenue is expected to reach 139.1 billion won (up 20% quarter-on-quarter, up 36% year-on-year), and operating profit is expected to be 51.5 billion won (up 56% quarter-on-quarter, up 133% year-on-year), surpassing the consensus by 21%." She analyzed, "Although September is typically a seasonally slow period and drop amounts usually decline compared to August, casino net sales hit a record high of 53 billion won, driving the improvement in results."

Im assessed, "This is a level that was anticipated for the peak season next year, so there is a very high possibility of upward revisions not only for the third quarter but also for the fourth quarter and next year's results." In fact, the third-quarter drop amount recorded 668.5 billion won, a 63% increase year-on-year, and the number of visitors also rose by 61% year-on-year. The hotel division is also expected to achieve 8.9% revenue growth year-on-year, maintaining a 90% occupancy rate (OCC), and despite an increase in the proportion of comps due to a higher average daily rate (ADR).

In 2026, qualitative growth centered on VIP customers is expected to become more pronounced. Im explained, "This year, both drop amount and visitor numbers-key indicators of qualitative growth-showed stronger-than-expected growth, driven by MASS-centered expansion. Recently, the drop amount per person has continued to rise every month, indicating that VIP growth is also accompanying this trend." She added, "With expanding net cash flow and robust membership growth, there is a high likelihood of further upward revisions to results in 2026, driven by a VIP-centered growth story, and we present the company as our top pick in the sector."

Im also forecast, "In 2026, revenue is expected to reach 716.4 billion won (up 16% year-on-year), and operating profit 176 billion won (up 51% year-on-year), with a full-fledged leverage effect anticipated. A return to annual net profit, long awaited, is also a key point to watch."

Meanwhile, in the short term, the stock price has been moving sideways, mainly due to the overhang issue (large convertible bonds). However, Im emphasized, "The sixth overseas convertible bond, which was the largest, was repaid through funding without conversion or CB reissuance. With the maturity of the 81st convertible bond worth 80.9 billion won scheduled for November 29 this year, the overhang issue is expected to be resolved by 2026." She stressed, "Given the high likelihood of continued strong growth through VIP expansion next year, the current price range remains an attractive buying opportunity."

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