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[EQUITIES] ‘New resort costs to weigh down Paradise’

[THE INVESTOR] Paradise Group (034230) will be burdened by the costs for building a resort in Yeongjongdo that is slated to open in 2017, said Shinhan Investment on Oct. 18.

The securities firm maintained a “buy” recommendation but lowered the target price to 18,000 won (US$15.90) from 21,000 won.

“The third-quarter revenue will rise 22.9 percent on-year to 175.5 billion won and the operating profit will be up 46.4 percent to 16.8 billion won,” forecast Seong Jun-won, an analyst at Shinhan. 

The market consensus for the operating profit is 20 billion won.

“Considering that last year’s third quarter hit the bottom due to MERS outbreak, operating profit in the same period this year should have reached 30 billion won,” noted Seong but the casino operator had to pay 10 billion won in severance pay and recruit personnel for the new resort.

The long-term trend in stock price is deeply related to the new resort, which can hardly be expected to normalize by 2017, said the analyst.

By Hwang You-mee (