[Click e-Stock] Paradise Expected to Continue Profit Improvement in Second Half... Investment Opinion and Target Price Raised

On August 21, Hyundai Motor Securities upgraded its investment opinion on Paradise from 'Market Perform' to 'Buy', and raised its target price from 13,000 won to 24,000 won, citing continued profit improvement driven by an increase in the number of Chinese visitors in the second half of the year.

Kim Hyonyong, a researcher at Hyundai Motor Securities, explained, "The target price was calculated by applying a target price-to-earnings ratio (PER) of 24 times to the estimated earnings per share (EPS) for 2026. The target PER reflects the lower end of the historical boom cycle in 2016, when the number of Chinese visitors and drop amount (the amount casino customers exchanged for chips) reached their peak (PER 24-36 times)."

In the second quarter of this year, the number of foreign visitors increased by 15% year-on-year to 4.96 million, surpassing the previous peak of 4.89 million in the third quarter of 2016. Among them, the number of Chinese visitors rose by 17% to 1.4 million. Kim noted, "While the increase in Chinese visitors is significant, it is still only 55% of the historical peak of 2.52 million in the third quarter of 2016." He added, "With group visa-free entry for Chinese tourists temporarily allowed from August 29 to June next year, the number of Chinese visitors is certain to increase toward a new historical high."

In the second half of the year, performance improvement driven by the increase in Chinese visitors is expected to continue. Kim stated, "While the number of foreign visitors in the first half increased by 14.6% year-on-year, Paradise's casino revenue growth was only 8.2%, slightly below the market, and the drop amount grew just 2.8% during the same period. This appears to be due to a slowdown in the Chinese VIP drop amount." He continued, "The Chinese VIP drop amount is currently less than half of its historical peak, so considering the sharp increase in Chinese visitors expected from the fourth quarter, a steep improvement in performance is anticipated."

In July, Paradise's drop amount rose by 7.7% year-on-year to 583.9 billion won, and revenue increased by 22.9% to 75.7 billion won. Kim analyzed, "While the drop amount for Chinese, Japanese, and other VIPs increased by around 5%, the mass customer drop amount surged by 16%, driving overall company performance. In terms of revenue, Paradise City led the gains with a 35% surge, while Walkerhill also showed a solid trend with a 13% increase."

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