Market Sentiment Around Loss-Making Lotte Tour Development Co., Ltd. (KRX:032350)

We feel now is a pretty good time to analyse Lotte Tour Development Co., Ltd.'s (KRX:032350) business as it appears the company may be on the cusp of a considerable accomplishment. Lotte Tour Development Co., Ltd., together with its subsidiaries, engages in the provision of travel and tourism services in South Korea. The ₩582b market-cap company’s loss lessened since it announced a ₩202b loss in the full financial year, compared to the latest trailing-twelve-month loss of ₩101b, as it approaches breakeven. As path to profitability is the topic on Lotte Tour Development's investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

View our latest analysis for Lotte Tour Development

Lotte Tour Development is bordering on breakeven, according to the 4 South Korean Hospitality analysts. They expect the company to post a final loss in 2025, before turning a profit of ₩41b in 2026. So, the company is predicted to breakeven approximately 2 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2026? Working backwards from analyst estimates, it turns out that they expect the company to grow 104% 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.

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

Before we wrap up, there’s one issue worth mentioning. Lotte Tour Development currently has a 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 around 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 compiled a list of essential factors you should further research:

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.