Lotte Tour Development Co., Ltd.'s (KRX:032350) About To Shift From Loss To Profit

With the business potentially at an important milestone, we thought we'd take a closer look at Lotte Tour Development Co., Ltd.'s (KRX:032350) future prospects. Lotte Tour Development Co., Ltd., together with its subsidiaries, provides travel and tourism services in South Korea. The ₩1.4t market-cap company announced a latest loss of ₩82b on 31 December 2020 for its most recent financial year result. As path to profitability is the topic on Lotte Tour Development's investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.

View our latest analysis for Lotte Tour Development

Expectations from some of the South Korean Hospitality analysts is that Lotte Tour Development is on the verge of breakeven. They expect the company to post a final loss in 2020, before turning a profit of ₩40b in 2021. The company is therefore projected to breakeven around a year from now or less! How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 118% year-on-year, on average, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Given this is a high-level overview, we won’t go into details of Lotte Tour Development's upcoming projects, though, take into account that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

One thing we would like to bring into light with Lotte Tour Development is its debt-to-equity ratio of over 2x. Typically, debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

There are key fundamentals of Lotte Tour Development which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Lotte Tour Development, take a look at Lotte Tour Development's company page on Simply Wall St. We've also put together a list of key factors you should look at:

1. Valuation: What is Lotte Tour Development worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Lotte Tour Development is currently mispriced by the market.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Lotte Tour Development’s board and the CEO’s background.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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