[Click e-Stock] "Lotte Tour Development Expected to See Strong Performance Rebound in March Peak Season"

On March 9, Hanwha Investment & Securities analyzed that Lotte Tour Development is entering the peak season in March, which will lead to a full-fledged recovery in performance. The report also explained that, as the stock price has undergone a correction since the beginning of the year, its valuation attractiveness has increased, making an aggressive buying strategy valid.

Suyoung Park, an analyst at Hanwha Investment & Securities, forecasted in a report released that day, "After a sluggish February, the company will begin preparing for the peak season starting in March." According to the report, Lotte Tour Development's casino net sales in February amounted to 32.6 billion won, and the drop amount was 172.9 billion won, representing a decrease of 28% and 34% month-on-month, respectively.

However, this was analyzed as a result of the seasonal impact of the off-peak season for tourism in Jeju. Jeju’s tourism demand typically enters its off-season from November to February, and in fact, the number of round-trip flights to Jeju in February fell by about 20% compared to the previous month.

However, the situation is expected to change starting in March. Analyst Park stated, "From March, with the recovery of flight schedules and the hosting of a large-scale baccarat tournament, there is a high possibility of a short-term rebound in casino performance," adding, "After the off-season ends, strong year-on-year performance growth will reappear from the second quarter."

The performance outlook for the entire foreigner-only casino sector is also positive. Based on market consensus, next year's operating profit growth rate is expected to be 14% for Lotte Tour Development, 21% for Paradise, and 17% for Grand Korea Leisure. The growth rate of controlling shareholders’ net profit is estimated at 54%, 27%, and 14%, respectively.

However, the stock prices have declined significantly since the start of the year due to the sector being overlooked, which has further enhanced valuation attractiveness. Currently, the 12-month forward price-to-earnings ratio (P/E) stands at 16.7 times for Lotte Tour Development, 14.4 times for Paradise, and 13.2 times for Grand Korea Leisure. This is lower than Paradise’s average P/E of about 21 times during the period of a surge in Chinese inbound tourism in 2013–2014.

Analyst Park emphasized, "Although strong earnings growth is expected, the significantly reduced multiples make an aggressive buying strategy for major casino stocks valid," adding, "It makes sense to buy when the P/E is around 15 times."

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