by Jang Hyowon
Published 11 Apr.2023 08:08(KST)
Updated 24 Jul.2023 23:08(KST)
On the 11th, SK Securities analyzed that Lotte Tour Development's casino visitors reached an all-time high last month, stating that excessive concerns present a clear buying opportunity. Accordingly, they maintained a buy rating and a target price of 25,000 KRW for Lotte Tour Development.
Na Seung-du, a researcher at SK Securities, stated in a report on the same day, “As the maturity date of current liabilities approaches in the second half of this year, concerns led to a 11.2% drop just yesterday, closing weakly (intraday low of -18.5%). We consider this an unmistakable bottom-buying opportunity caused by excessive worries.”
Researcher Na explained, “First, the short-term borrowings of 700 billion KRW are naturally changing from long-term borrowings to short-term borrowings as the maturity is approaching in November this year,” adding, “Jeju Dream Tower opened in December 2020, while the borrowing occurred in November 2020.”
He continued, “The borrowing took place during the peak of the COVID-19 pandemic when it was difficult to conduct proper business, so the valuation of collateral assets was inevitably minimal,” and analyzed, “Currently, quarterly earnings are showing an upward trend, and considering the land revaluation and other factors, refinancing is deemed sufficiently feasible.”
He also noted that the early redemption issue of convertible bonds is unlikely to have a significant impact. He said, “The foreign currency convertible bonds, which have raised the possibility of early redemption, mature in September 2025, with the earliest early redemption request date starting this September,” adding, “The conversion price per share is 13,250 KRW, and considering that the stock price consistently stayed above the conversion price before the recent sharp decline, the likelihood of an immediate early redemption request is low. Furthermore, there is still room within the articles of incorporation for convertible bond issuance limits, so even if early redemption is requested, rollover is sufficiently possible.”
Additionally, he emphasized, “Casino sales are noticeably recovering along with the recovery of foreign arrivals to Jeju Island,” estimating that “the number of foreign casino visitors in March was about 13,000, setting a new all-time high,” and stressed, “With a clear rebound in the travel and casino sectors, excessive sell-offs should be used as buying opportunities.”
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