Lotte Tour Development Co., Ltd.'s (KRX:032350) 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, engages in the provision of travel and tourism services in South Korea. With the latest financial year loss of ₩117b and a trailing-twelve-month loss of ₩102b, the ₩969b market-cap company alleviated its loss by moving closer towards its target of breakeven. Many investors are wondering about the rate at which Lotte Tour Development will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

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According to the 5 industry analysts covering Lotte Tour Development, the consensus is that breakeven is near. They expect the company to post a final loss in 2026, before turning a profit of ₩26b in 2027. The company is therefore projected to breakeven around 2 years from today. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 107%, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

We're not going to go through company-specific developments for Lotte Tour Development given that this is a high-level summary, though, keep in mind that generally a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

See our latest analysis for Lotte Tour Development

One thing we would like to bring into light with Lotte Tour Development is its debt-to-equity ratio of over 2x. Generally, the rule of thumb is 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 too many aspects of Lotte Tour Development to cover in one brief article, but the key fundamentals for the company can all be found in one place – Lotte Tour Development's company page on Simply Wall St. We've also put together a list of essential 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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.