[Edaily Reporter Kwon Oh Seok ] NH INVESTMENT & SECURITIES announced on the 14th that it is maintaining its “Buy” rating on LOTTE TOUR DEVELOPMENT CO., LTD(032350)but lowering its target price from 22,000 won to 18,000 won.

Lee Hwa-jeong, an analyst at NH INVESTMENT & SECURITIES, stated, “According to the details of a briefing regarding the increase in the Tourism Promotion and Development Fund (Tourism Fund), the newly established 15% contribution rate is likely to apply only to the portion of revenue exceeding 300 billion won per business location,” adding “For reference, the Ministry of Culture, Sports and Tourism is currently reviewing the increase in the Tourism Fund contribution rate. While LOTTE TOUR DEVELOPMENT CO., LTD is subject to Jeju Island ordinances, we believe it is highly likely that the same policy direction will ultimately apply,” she analyzed.
Last month, the government decided to push for a legislative amendment to raise the upper limit of the Tourism Promotion and Development Fund contribution rate for foreigner-only casino operators from the current 10% of revenue to 15%. The move is intended to adjust a system that has been in place for over 30 years to align with the growth of the casino industry; however, the industry has raised concerns that this could weaken global competitiveness due to a decline in operating profit and a contraction in investment.
The analyst noted, “Factoring this in, the additional burden as of 2027 is estimated to be in the range of 15 billion won, equivalent to about 7% of the estimated operating profit for 2027. The 7% drop in the stock price following the news release indicates that the market has already fully priced in these concerns,” the analyst noted, adding, “It is also positive that the burden of convertible bond (CB) conversions has been alleviated, as half (2.74 million shares) of the remaining 8-1 series CBs were redeemed early and canceled.”
Regarding the reason for lowering the target stock price, he explained, “For the annual EPS (earnings per share) estimate, we excluded the possibility of reduced interest expenses, given the unfavorable external environment.”
Previously, second-quarter consolidated revenue came in at 203.3 billion won (up 29% year-over-year) and operating profit at 51.9 billion won (up 57%), in line with consensus estimates. He emphasized, “We are focusing on the recovery in profitability driven by strong casino-led performance.”
He added, “While we expect the trend toward operational efficiency driven by an improved customer mix to continue in the second half of the year, reductions in financial expenses are likely to be limited given the challenging refinancing conditions (interest rates and regulations).”