KOSPIHotel & Leisure032350

Lotte Tour Development

₩10,900▼ 7.23%2026-10-02 close

Market Cap

₩867.4B

Turnover

₩14.2B

Volume

1.3M

Shares out.

79.7M

PER

18.5×

PBR

2.7×

EPS

₩679

Dividend Yield

0.00%

PER, EPS, PBR and BPS are calculated in-house from the last 4 quarters (2025Q3–2026Q2) · Dividend yield is based on ₩0 per share · Prices as of the 2026-10-02 close

Report overview

Casino Profit Surge Weighed Against Interest and Regulatory Burdens

Rising visitor counts and hold rates at the Jeju Dream Tower casino have pushed operating profit to record territory, but financing costs cited at around 150 billion won a year and a proposed hike in tourism fund contribution rates now govern the pace of bottom-line recovery.

1
For 2025 the company posted consolidated revenue of 653.4 billion won and operating profit of 143.3 billion won (21.9% margin), a complete reversal from the 60.6 billion won operating loss of 2023, with net profit attributable to owners also turning positive.
2
Second-quarter 2026 revenue of 203.3 billion won and operating profit of 51.9 billion won set quarterly records, and first-half operating profit rose 74.9% year on year to 80.7 billion won.
3
The casino table hold rate climbed to 22.1% in the second quarter of 2026, which the company describes as approaching the average of large Macau integrated resorts, though hold rates fluctuate materially by quarter.
4
A prepayment-fee waiver period on the 950 billion won of Dream Tower-secured long-term borrowings (800 billion won senior at 6%, 150 billion won subordinated at 9%) began in July 2026, but the company said no refinancing plan has been confirmed.
5
The government is pursuing a legal amendment raising the ceiling on tourism promotion fund contributions for foreigner-only casinos from 10% to 15%, leaving a policy overhang that includes the possibility of parallel changes to Jeju's own ordinance.

Business structure

Lotte Tour Development began as a travel company founded in 1971, and its portfolio expanded into hotels and retail when the Jeju Dream Tower integrated resort opened in December 2020.

Dream Tower stands 38 floors with gross floor area of 303,737 square meters, the largest on Jeju, and Hyatt operates the 1,600 all-suite rooms, 14 restaurants and bars, an eighth-floor pool deck and a 38th-floor observatory as Grand Hyatt Jeju.

The casino business was added to the corporate purpose in 2014 and the platform was secured in 2018 by acquiring the casino entity that Paradise Group had operated at the Lotte Hotel Jeju.

The profit engine is the foreigner-only Dream Tower casino: 2025 casino revenue reached 476.6 billion won, up 61.8% from 294.6 billion won a year earlier, with 590,332 visitors and table drop of 2.4645 trillion won.

In the second quarter of 2026, casino net revenue was 147.088 billion won, up 33.7% year on year, visitors totaled 182,872, up 23.2%, and the quarterly average hold rate was 22.1%.

The hotel functions as stay infrastructure supporting casino traffic: second-quarter hotel revenue was 45.4 billion won, up 10.7%, with 128,600 room-nights sold, occupancy of 88.3% and foreign guests accounting for 77.3% of rooms sold.

The legacy travel division is smaller and shows large quarterly swings depending on when cruise revenue is recognized. On competitive positioning, KB Securities in a March 2026 report put the company's Jeju casino market share at 80% and Greater China customer mix at 90%.

Its standing among domestic foreigner casinos has also shifted: in July 2025 Dream Tower casino recorded net revenue of 43.44 billion won, the highest among the 16 foreigner-only casinos on a single-property basis.

Earnings trend

Quarterly revenue · Operating profit

₩157.7B₩33.1B25Q2₩186.7B₩53B25Q3₩187.1B₩44.2B25Q4₩156.2B₩28.8B26Q1₩203.3B₩51.9B26Q2

RevenueOperating profit

Annual revenue · Operating profit

₩183.7B-₩118.7B2022₩313.5B-₩60.6B2023₩471.5B₩39B2024₩653.4B₩143.3B2025

RevenueOperating profit

Quarterly results · Last 5 quarters
Quarter	Revenue	Operating profit	Op. margin
2025Q2	₩157.7B	₩33.1B	21.0%
2025Q3	₩186.7B	₩53B	28.4%
2025Q4	₩187.1B	₩44.2B	23.6%
2026Q1	₩156.2B	₩28.8B	18.4%
2026Q2	₩203.3B	₩51.9B	25.5%

Annual results
Year	Revenue	Operating profit	Net income (parent)	Op. margin	ROE	Debt-to-equity
2022	₩183.7B	-₩118.7B	-₩224.7B	−64.6%	−95.5%	678.1%
2023	₩313.5B	-₩60.6B	-₩202.2B	−19.3%	−292.3%	2590.9%
2024	₩471.5B	₩39B	-₩116.6B	8.3%	−36.8%	592.1%
2025	₩653.4B	₩143.3B	₩27.8B	21.9%	7.5%	488.7%

Consolidated basis (financial statements including subsidiaries) · Final figures from DART filings · Net income attributable to owners of the parent · Data as of 2026-09-04

Earnings analysis

On confirmed figures, the profit structure has changed completely in three years.

From revenue of 183.7 billion won with an operating loss of 118.7 billion won in 2022 and revenue of 313.5 billion won with a 60.6 billion won operating loss in 2023, the company turned profitable in 2024 with revenue of 471.5 billion won and operating profit of 39.0 billion won (8.3% margin), then expanded to revenue of 653.4 billion won and operating profit of 143.3 billion won (21.9% margin) in 2025.

The bottom line moved from net losses attributable to owners of 202.2 billion won in 2023 and 116.6 billion won in 2024 to a profit of 27.8 billion won in 2025, though one-off elements were involved: the sharp fourth-quarter 2025 net profit was helped by an increase in deferred tax assets following adoption of consolidated tax filing.

By quarter, revenue and operating profit were 186.7 billion won and 53.0 billion won in the third quarter of 2025 and 187.1 billion won and 44.2 billion won in the fourth (net profit attributable of 38.9 billion won), before slowing in the first quarter of 2026 to revenue of 156.2 billion won and operating profit of 28.8 billion won (18.4% margin), with a net loss attributable of 7.4 billion won.

First-quarter results came in slightly below market expectations, attributed to lower travel division revenue from cruise scheduling imbalance and to labor and outsourcing costs tied to higher hotel occupancy.

Hana Securities estimated first-quarter labor costs at 34.8 billion won, up 25%, with headcount up about 360 over a year and a 5% wage increase from September 2025 flowing through.

The second quarter of 2026 rebounded to revenue of 203.3 billion won, operating profit of 51.9 billion won (25.5% margin) and net profit attributable of 14.7 billion won, and cumulative first-half operating profit reached 80.71 billion won, up 74.9% from 46.14 billion won a year earlier, while half-year net profit of 7.17 billion won reversed a 17.77 billion won loss.

However, first-half financing costs of 70.42 billion won, slightly down from 74.27 billion won a year earlier, still exceeded operating profit and weighed on profitability.

The balance sheet is improving in direction but heavy in absolute terms: liabilities of 1,799.4 billion won against equity of 368.2 billion won at end-2025 put the debt-to-equity ratio at 488.7%, down from 2,590.9% in 2023 and 592.1% in 2024.

Cash generation has stabilized, with operating cash flow of minus 13.1 billion won in 2023, 121.7 billion won in 2024 and 100.1 billion won in 2025, and over the four quarters from the third quarter of 2025 through the second quarter of 2026 revenue totaled 733.3 billion won with operating profit of 177.9 billion won, an operating margin near 24%.

Industry analysis

Jeju's foreigner-only casino market has moved past recovery into expansion.

Jeju Province reported that combined 2025 revenue at the island's eight foreigner-only casinos rose 40.8% to 646.5 billion won from 458.9 billion won, admissions grew 37.8% to 913,890, and customers in their 20s and 30s accounted for 51.3%, more than half.

With independent travelers making up 91.9% of foreign visitors, integrated-resort casinos were also described as establishing themselves as nighttime tourism hubs.

Some see remaining headroom in demand: KB Securities noted in a March 2026 report that 1.58 million Chinese visitors came to Jeju in 2025, only 51.6% of the 3.06 million seen before the THAAD dispute.

Competitively, the company shares inbound demand with Paradise, Grand Korea Leisure and Inspire; as of July 2025, Paradise City in Incheon recorded 40.456 billion won, Paradise Walkerhill in Seoul 29.737 billion won and Seven Luck Gangnam COEX 19.115 billion won.

Policy is moving in the opposite direction from the operating cycle.

The Ministry of Culture, Sports and Tourism is pursuing a change to raise the ceiling on casino operators' tourism promotion and development fund contributions under the Tourism Promotion Act from 10% to 15% of gross revenue; the current enforcement decree applies a progressive structure of 1% up to 1 billion won of annual revenue, 5% from 1 billion to 10 billion won and 10% above 10 billion won.

The ministry said the higher rate would apply only to a newly created high-revenue bracket, and that fund contributions are deducted as an operating expense from revenue rather than paid out of operating profit.

Indirect effects on Jeju operators are being discussed: Hana Securities said Lotte Tour Development is not directly subject because it falls under the Jeju special act, but factoring in the chance Jeju adopts a similar change, operating profit could fall 19%, while Eugene Investment & Securities estimated roughly 30 billion won of additional burden if rates rise.

Over the medium term, the industry points to intensified competition once an Osaka integrated resort opens in 2030.

Outlook

Management maintains a growth stance. Lotte Tour Development said that with casino and hotel strength plus cruise revenue in the travel division recognized in the second quarter, it expects record results for both the first half and the full year.

On growth levers, Hana Securities in a May 2026 report cited rolling-commission competitiveness derived from the tax-rate gap with Macau, the resumption of the Macau-Jeju route in June, potential additional annual casino revenue of more than 100 billion won, and plans to add three poker tables and about 80 slot machines and electronic table games.

Financing cost is the key variable. Long-term borrowings raised for the Jeju Dream Tower project total 950 billion won, comprising 800 billion won senior at 6% and 150 billion won subordinated at about 9%, with related annual financing costs put at roughly 150 billion won.

Shinhan Securities said in a May 2026 report that early-repayment fees on the roughly 950 billion won of building-secured loans are waived from July 2026. Even so, a company official said there is no plan under review and nothing confirmed regarding debt restructuring.

Broker views diverge: Hana Securities estimated financing costs would fall from 125.8 billion won in 2026 to 99.8 billion won in 2027 and 74.8 billion won in 2028.

By contrast, NH Investment & Securities, in an August 14, 2026 report, estimated this year's operating profit at 197.4 billion won and financing costs at 130.5 billion won, judged that "given difficult refinancing conditions, savings in financing costs are expected to be limited," and excluded potential interest relief from future refinancing from its estimates.

The same report noted the existing large secured loan runs to May 2027 and projected net debt declining from 869.4 billion won in 2025 to 754.5 billion won in 2026, 604.2 billion won in 2027 and 453.0 billion won in 2028.

Valuation

PER

18.5×

PBR

2.7×

ROE

14.8%

EPS

₩679

BPS

₩4,718

Dividend per share

₩0

Valuation here is complicated by the fact that the earnings structure itself is changing.

Through 2023 and 2024 net losses meant earnings-based multiples could not be computed at all; only with the swing to positive net profit attributable to owners in 2025 and continued profit in the first half of 2026 has an earnings-based comparison become possible.

Because net profit remains small relative to operating profit, earnings multiples are far more sensitive to whether financing costs decline than to the pace of operating-margin improvement.

On the asset side, revalued property makes up a large share of equity, yet the shares trade at a premium to net assets, reflecting a market that weights the earnings-recovery path more heavily than book value.

On disclosed figures there is no record of cash dividends, so no dividend yield is computed, consistent with a stage in which cash is directed to debt repayment.

As for broker views, Hana Securities maintained a buy rating and a 28,000 won target price in a May 2026 report, assessing that the then-current share price implied about 13 times estimated 2027 earnings, and Shinhan Securities maintained a buy rating and a 32,000 won target price in a May 2026 report. Those are the brokers' own views, not KOSAI's, and predate subsequent earnings and policy developments.

PER, EPS, PBR and BPS are all calculated in-house (the same method as Naver and Toss) · Dividend yield = cash dividend per share from DART filings (supplemented by KRX) ÷ current price · As of 2026-09-04

Bull factors

Operating leverage from a fixed-cost structure

Because an integrated resort adds revenue faster than staffing and facility costs, margin improvement has been rapid.

The operating margin rose from 8.3% in 2024 to 21.9% in 2025, and over the four quarters from the third quarter of 2025 through the second quarter of 2026 revenue totaled 733.3 billion won with operating profit of 177.9 billion won.

The company said first-quarter revenue grew 28.1% while operating expenses rose only 17%, and that it expects operating leverage to take fuller effect from this year. Rising labor costs and marketing spending, however, partly offset that effect.

Remaining headroom in operating metrics

Casino profitability metrics still trail global leaders. KB Securities said in a March 2026 report that the company holds 170 tables with daily revenue per table of about 10 million won versus a Macau average of 21 million won, leaving capacity to absorb rising visitor numbers.

The table hold rate in May 2026 was 22.6%, approaching the 25.1% average of very large integrated resorts in Macau's Cotai district. Planned additions of slots, electronic table games and poker tables also represent room for higher utilization.

Debt reduction path and entry into the fee-waiver window

The direction of financial burden points toward easing. The debt-to-equity ratio fell from 2,590.9% in 2023 to 592.1% in 2024 and 488.7% in 2025, while operating cash flow held at 121.7 billion won in 2024 and 100.1 billion won in 2025.

The company has entered the prepayment-fee waiver window on its 950 billion won of borrowings. NH Investment & Securities projected net debt gradually declining from 869.4 billion won in 2025 to 453.0 billion won in 2028.

Bear factors

Financing costs exceeding operating profit

Improvement at the operating level is still not passing fully through to net profit. First-half 2026 financing costs of 70.42 billion won exceeded operating profit and weighed on profitability.

NH Investment & Securities expects limited savings given difficult refinancing conditions and excluded future refinancing benefits from its estimates. It has also been noted that since the 2024 refinancing already cut the main loan rate to 6%, materially lower rates would require better funding terms than before.

Regulatory debate and capital-market reaction

There are reports of policy risk spilling into actual funding terms.

At an August 2026 policy meeting, the company's finance director said an institutional investor that had invested 70 billion won over four years and seven months submitted an early-redemption request on the 30th of the prior month, right after reports of the fund-rate hike, instead of converting into shares.

Industry participants also said banks that had provided secured loans were making inquiries from a negative standpoint. On the proposed license-renewal system, company representatives argued that uncertainty over renewal would erode hiring competitiveness and the revenue base.

Greater China concentration and hold-rate volatility

A large share of results depends on demand from one region and on probability-driven metrics. KB Securities estimated in a March 2026 report that Greater China customers account for about 90% of the mix.

Hold rates are not stable either: in a July 2025 disclosure the company noted that the table-game hold rate slipped to 15.7% in June before improving to 17.3% in July. One analysis put the comp ratio at roughly 45% in the first quarter, meaning the conversion into net revenue can shift with marketing intensity.

Risk factors

Financial and liquidity

Borrowing scale and maturity structure are the core risk. The company pledged tangible assets with a book value of 1,572.5 billion won, including land of 635.3 billion won and buildings of 937.2 billion won, under a real-estate security trust. The existing large secured loan runs through May 2027.

At end-2025 liabilities stood at 1,799.4 billion won against equity of 368.2 billion won, a debt-to-equity ratio of 488.7%. Rate conditions and collateral valuations at maturity will determine funding terms.

Regulatory and institutional

Debate over fund contribution rates and the licensing regime is proceeding in parallel. In July 2026 the government held a meeting with casino operators and Jeju Province to gather views on raising tourism fund contribution rates and introducing license renewal, and a bill was expected after a National Assembly forum.

Detailed brackets and rates are to be finalized during enforcement-decree revision after consultation with the industry and experts. The possibility that Jeju Province pursues a similar change is also being discussed.

Demand and external variables

Inbound demand is sensitive to route supply and external conditions. One analysis noted that Jeju international flight frequencies expanded from 190 in March 2026 to 235 in May, improving the environment for foreign arrivals.

By contrast, routes linking Jeju and China number around 13, far below the 33 in 2016, with direct services to large cities such as Chongqing and Tianjin suspended. The company itself cited Middle East geopolitical instability and high oil prices among external variables in its results commentary.

What to watch next

Early October 2026
The monthly September disclosure should be checked for casino net revenue, visitors, table drop, hold rate and hotel occupancy. The company has disclosed prior-month figures early each month, and how China's National Day holiday demand feeds into the third-quarter close is the point to watch.
Late October to early November 2026
Watch the switch to the winter international flight schedule and any change in the number of Jeju-China direct routes. Jeju-China routes stand at around 13 versus 33 in 2016, so the pace of route restoration shapes the slope of visitor growth.
During November 2026
The third-quarter consolidated results should be read alongside the operating margin and financing cost trend. With the margin recovering from 18.4% in the first quarter to 25.5% in the second, the peak-season margin level and whether interest expense declines will determine the direction of net profit.
Fourth quarter 2026 to first half 2027
Track the National Assembly's handling of the Tourism Promotion Act amendment, the finalization of the high-revenue bracket and rate in the enforcement decree, and any move to revise Jeju's ordinance. The higher rate would apply only to a newly created high-revenue bracket, with details to be set during enforcement-decree revision.
Before May 2027
Handling the senior secured loan maturity is the largest financial event. The existing large secured loan runs through May 2027, and although the prepayment-fee waiver window has begun, the company says nothing is confirmed on debt restructuring, so the eventual refinancing terms and rate will drive the net profit path.

Overall view

Lotte Tour Development concentrates its profit and loss in a single asset, the Jeju Dream Tower integrated resort, so higher casino visitor counts and hold rates flow almost directly into margins.

On confirmed figures it moved from an operating loss of 118.7 billion won in 2022 to operating profit of 143.3 billion won in 2025 (21.9% margin), and in the second quarter of 2026 it set quarterly records with revenue of 203.3 billion won and operating profit of 51.9 billion won.

On the other hand, first-half financing costs of 70.42 billion won exceeded operating profit, leaving the net profit recovery at an early stage, and the end-2025 debt-to-equity ratio of 488.7% remains high in absolute terms.

On policy, a legal amendment raising the ceiling on foreigner-only casinos' tourism promotion fund contributions from 10% to 15% is being pursued, with discussion covering both the company's status under the Jeju special act and the chance Jeju adopts a similar change.

On the constructive side sit headroom in operating metrics, a declining net debt path and entry into the prepayment-fee waiver window; on the cautious side sit the stickiness of financing costs, regulatory uncertainty and demand concentration in Greater China, and the two carry equal weight.

The sequence to verify is therefore monthly casino metrics, then third-quarter margins and financing costs, then finalization of the fund-rate enforcement decree, then refinancing terms for the May 2027 maturity, and which of these settles first will reshape how results are read. This report is for information purposes and contains no buy or sell opinion and no target price.

Sources

Korea Exchange (KRX) — Prices · Market Cap · Volume
FSS electronic disclosure system (DART) — Financial statements · Dividend filings

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Report written 2026-09-05 · Data as of 2026-09-04

This content is AI analysis of market data and web search results, provided for information only. It is not a solicitation or recommendation to invest. Investment decisions and their consequences are the investor's own responsibility. Data may be delayed or contain errors.