[Click e-Stock] "Leisure Industry Enters the Main Game from March...Lotte Tour Development Poised for High Growth with 'Inbound Optimization'"

On March 24, Shinhan Investment Corp. released an analysis stating that the leisure industry is entering its peak season starting in March, which will further strengthen its growth momentum. In particular, the recovery of inbound demand, especially centered around casinos, is accelerating, raising expectations for improved performance at Lotte Tour Development.

Ji Inhae, a researcher at Shinhan Investment Corp., explained, "The leisure industry enters its seasonal peak from March," adding, "With the expansion of flight routes and the tangible increase in the number of arrivals, a positive trend is expected across all sectors benefiting from inbound demand."

In this context, Lotte Tour Development was identified as a company optimized for the 'inbound theme.' Shinhan Investment Corp. initiated coverage on Lotte Tour Development with an investment opinion of 'BUY' and set a new target price of 32,000 won.

Researcher Ji stated, "With the onset of the seasonal peak in March, the number of flights is expected to increase by 22% compared to the previous month, and high growth will likely continue as VIP game promotions drive trailing consumption from Macau." She added, "Casino sales are projected to grow by 62% year-on-year in 2025, marking the beginning of a full-fledged growth phase, and this stable growth trend is expected to continue through 2026 and 2027."

In fact, the number of casino members at Lotte Tour Development has been rising rapidly. It increased from about 13,000 in the first quarter of 2023 to 73,000 in the fourth quarter of 2024, and is expected to reach 129,000 by February 2026.

Researcher Ji assessed, "Based on convenient airport access and strong sales capabilities, the number of casino members is rising steeply," adding, "The comp ratio per room has also expanded from the previous 44% to as high as 80%, which will make it possible to attract new customers."

There is also ample room for growth in terms of profitability. She said, "Compared to Macau benchmarks, WPUPD is at about 8.2 million won, which is much lower than Macau's 21.63 million won, so there is significant potential for further increases." She continued, "It should also be possible to achieve EBITDA of over 300 billion won."

The competitive environment and market structure are also described as positive. Lotte Tour Development holds about an 81% market share in the Jeju region and faces less intense competition than in Macau. In addition, the recovery of Chinese tourists is further increasing growth expectations.

The outlook for the overall leisure industry is also bright. The so-called 'Korea-Japan ban' effect is expected to become fully apparent from March, resulting in a visible increase in arrivals. She said, "The Korea-Japan ban effect is expected to fully materialize from March," and added, "As the weather warms and flight options expand, the industry will enter its seasonal peak, and the number of arrivals will begin to increase significantly from March."

In addition, concerns over higher fuel surcharges due to recent geopolitical factors are expected to have only a limited impact. Researcher Ji explained, "Rising fuel surcharges caused by war can be offset by a relative decrease in tourism spending resulting from a weaker won."

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