Interpark, Appropriate Market Cap 500 Billion KRW... The Most Undervalued Travel Stock

[Asia Economy Reporter Ji-hwan Park] Hana Financial Investment analyzed on the 24th that the current stock price level of Interpark is the most undervalued among travel stocks.

Lee Ki-hoon, a researcher at Hana Financial Investment, stated, "There is no particular reason for a discount, but even applying a 15x multiple (a 30% discount compared to Hana Tour) results in a fair market capitalization of over 500 billion KRW."

He added, "In the market, Hana Tour and Modetour are trading at 23x and 20x operating profit multiples for 2022, respectively. Although there is no special reason to receive a discount compared to Modetour, even applying a 15x multiple, which is a 30% discount compared to Hana Tour, results in a market capitalization exceeding 500 billion KRW."

There is also an analysis that the resolution of losses in the book division has become visible. The researcher explained, "The acquisition of Songin Books was strategically unfavorable, and the losses in the book business division expanded from -5 billion KRW to -11 billion KRW, continuously offsetting the profits of the Tour/ENT divisions."

However, various efforts are underway to resolve the structural losses in the book division, such as initiating rehabilitation procedures for Songin Books, which recorded losses of -2.1 billion KRW and -1.3 billion KRW over the past two years, in June last year and recently switching to a public competitive bidding process. It is expected to improve to break-even on a quarterly basis within this year.

The researcher explained, "The tour division recorded operating profits of 14.6 billion KRW and 15.8 billion KRW in 2015 and 2017, respectively," and added, "Considering the deferred demand and benefits from rising air ticket prices, around 15 billion KRW in 2022 is fully achievable."

He also added, "The ENT company has consistently recorded operating profits of around 10 billion to 14 billion KRW," and "With the resumption of musicals and concerts, recovery is naturally expected, and around 15 billion KRW seems fully achievable."