[Click eStock] "Hana Tour, Difficult Again This Year"

[Asia Economy Reporter Minji Lee] Kiwoom Securities on the 29th issued a buy rating and a target price of 73,000 KRW for Hana Tour, based on the expectation that the impact of COVID-19 will continue for some time.

Hana Tour is expected to record sales of 7.6 billion KRW and an operating loss of 26.1 billion KRW in the first quarter. Sales are forecasted to decrease by 93% compared to the previous year. Although some domestic travel sales are occurring, overseas travel remains nonexistent, and the company is expected to experience a COVID-19 impact similar to last year.

Namsoo Lee, a researcher at Kiwoom Securities, stated, “By reducing operating expenses through organizational slimming, the company will maintain a certain level of operating loss until overseas travel resumes,” adding, “The possibility of further loss expansion is low.”

Last year, the net number of outbound travelers was 3.68 million, down 86% from the previous year. Excluding 3.29 million departures in January and February last year, only 390,000 people traveled abroad over the following 10 months. Although the number of outbound travelers is expected to increase compared to last year, it is unlikely to lead to improved performance. Researcher Lee explained, “The biggest regret is that realistic strategies to improve the number of overseas travelers cannot be pursued, and currently, we have no choice but to wait for the easing of domestic and global travel restrictions due to COVID-19.”

He added, “Recovery among people in their 20s and 30s, rather than the main package customers in their 40s and 50s, will occur first, so even when global travel resumes, there will be a time lag in performance recovery,” and “If recovery begins after the fourth quarter, the number of outbound travelers could increase in 2022.”

Israel, which has achieved a high vaccination rate, is promoting limited travel resumption, and it is expected that travel restrictions will ease in other countries and regions with high vaccination rates. If domestic measures such as self-quarantine are relaxed in accordance with the vaccination rate situation, it could be seen as a positive signal for the resumption of overseas travel.