SK Securities reiterated its buy recommendation on Paradise Co. (KOSPI: 034230) on the 6th, keeping its target price at 25,000 won. At the current share price of 9,780 won, that implies upside of 155.6%.
The brokerage argues that Paradise has entered a new growth phase, with quarterly casino drop figures — the total amount of chips purchased at gaming tables, the most direct measure of casino revenue — hitting all-time highs in the first half of 2026.
SK Securities forecasts Paradise's 2026 revenue at 1.2913 trillion won and operating profit at 218.6 billion won, representing year-on-year growth of 12.3% and 40.3% respectively against last year's figures of 1.1499 trillion won in revenue and 155.8 billion won in operating profit. Growth is expected to continue into 2027, with revenue projected at 1.3544 trillion won and operating profit at 244.6 billion won.
The record drop figures are particularly significant given the turbulence South Korea's casino industry has endured since 2016. The first blow came from China's informal cultural ban on South Korea — imposed in retaliation for Seoul's decision to host the THAAD missile-defence system — which caused Chinese tourists' share of foreign arrivals to collapse from around 47% in 2016 to just 4% by 2022. The second was the Covid-19 pandemic. Even as international tourism recovered after the pandemic, quarterly drop figures stubbornly failed to reclaim pre-THAAD levels, partly because foreign visitors were spreading their spending more broadly across K-content and other entertainment. SK Securities interprets the first-half 2026 breakthrough above pre-THAAD levels as confirmation that this structural adjustment has now run its course.
The broader operating environment also looks favourable. Monthly foreign arrivals data from the Ministry of Justice show a continuing trend of record figures in 2026. Visa-free entry for Chinese tour groups has been extended through year-end. Paradise has also expanded its physical capacity by acquiring a Hyatt hotel, a move SK Securities believes will funnel more high-value guests into its casinos and amplify profit leverage.
Risks remain, however. Concerns over a potential increase in the tourism promotion fund levy and tighter casino licensing regulations have weighed on the share price — which has fallen 58.7% from its 52-week high of 23,650 won. A declining hold rate (the proportion of drop that converts into actual revenue) has also been a drag on near-term results. SK Securities contends that the levy increase, if enacted, would apply only above a certain revenue threshold and therefore have limited impact — but regulatory uncertainty remains a variable investors must absorb.
On valuation, the discount looks unusual by any measure. Based on SK Securities' 2026 earnings forecasts, Paradise trades at just 8.5 times forward earnings and 0.5 times book value. That compares unfavourably even with domestic peers: Grand Korea Leisure (GKL) trades at 9.7 times 2026 earnings and Kangwon Land at 10.4 times. A price-to-book ratio of 0.5 implies the market is valuing Paradise's assets at a steep discount to their stated worth — a level that suggests the company's growth prospects are being significantly underappreciated.
One further consideration for investors is share dilution from convertible bonds (CBs). According to recent capital changes, approximately 1.26 million shares were created through CB conversions between July 2025 and February 2026 — a seven-month window. Total shares outstanding now stand at 92.63 million. Whether further conversions occur, and at what scale, remains a variable worth monitoring for its potential effect on per-share value.