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Photo courtesy of Yonhap News |
[Alpha Biz= Ellie Kim] B Securities lowered its target price for Paradise Co. to KRW 21,000 from KRW 23,000 on May 7, citing weaker-than-expected first-quarter earnings, while maintaining a “Buy” rating.
Analyst Choi Yong-hyun said Paradise posted operating profit of KRW 37.3 billion for the first quarter, missing the market consensus of KRW 44.8 billion. The shortfall was largely attributed to increased costs following the acquisition of the Grand Hyatt Incheon West Tower, including an additional KRW 11 billion in labor and depreciation expenses compared to a year earlier, as well as a KRW 3.5 billion rise in marketing costs.
Choi added that the Grand Hyatt acquisition is estimated to have increased fixed costs by around KRW 15 billion per quarter, while borrowing costs are also expected to rise in connection with a planned hotel project in Jangchung-dong, central Seoul.
Reflecting these factors, KB Securities revised down its full-year operating profit forecast for Paradise by 13% to KRW 173.4 billion from KRW 199.2 billion. Its 2026 forecast was also cut by 9% to KRW 229.9 billion from KRW 253.5 billion.
Despite the downward revision, the brokerage noted potential upside from additional hotel investments. “There is growing speculation that Paradise may invest in properties such as Maison Glad Jeju and K-Square Hongdae, which could generate synergies with its Jeju casino operations,” Choi said.
He also pointed to expected gains in the second quarter from Japan’s Golden Week holiday and more aggressive marketing efforts, supporting the decision to maintain the “Buy” rating.
Alphabiz Ellie Kim 인턴기자(press@alphabiz.co.kr)
