[Click eStock] "HanaTour, Resolving Liquidity Issues Through Office Building Sale Is Crucial"

[Asia Economy Reporter Song Hwajeong] Yuanta Securities maintained a 'Buy' rating and a target price of 88,000 KRW on Hana Tour on the 6th, projecting that if liquidity issues are resolved through the sale of its headquarters building, the company could enter a recovery phase next year without additional capital raising risks.

Researcher Park Seongho of Yuanta Securities stated, "Hana Tour plans to resolve liquidity issues by selling its stake in the headquarters building (book value of the asset to be sold: 45.9 billion KRW)." He added, "If the sale is successful, it is expected to enter the recovery phase next year without additional capital raising risks such as rights offerings or convertible bond issuances." As of Q4 last year, Hana Tour's headquarters had equity capital of 159.3 billion KRW and net borrowings of 36.6 billion KRW. Current assets stood at 121.3 billion KRW, slightly exceeding current liabilities of 96 billion KRW.

Due to the impact of COVID-19, Hana Tour's Q1 performance this year was also weak. On a consolidated basis, Q1 sales were 7 billion KRW, with an operating loss of 41.8 billion KRW. Sales decreased by 92% compared to the same period last year, and operating losses continued. Researcher Park analyzed, "Operating losses significantly missed the consensus estimate (operating loss of 25.5 billion KRW). The operating losses by segment are estimated at 33.9 billion KRW for headquarters, 3 billion KRW for domestic subsidiaries, and 4.9 billion KRW for overseas subsidiaries. The reason for the performance falling short of expectations was due to one-time costs related to large-scale voluntary retirements."

The timing of industry recovery is expected to depend on vaccination rates. On the 5th of this month, the Korea Disease Control and Prevention Agency announced that fully vaccinated individuals will be exempt from a two-week self-quarantine upon return after traveling abroad. Fully vaccinated individuals are those who have passed two weeks after their second COVID-19 vaccination in Korea. The interval between the first and second doses of COVID-19 vaccines is approximately 11-12 weeks for AstraZeneca and 3 weeks for Pfizer. Based on the AstraZeneca vaccine schedule, those who received their first dose in early May will only be fully vaccinated by the end of July. Researcher Park noted, "As of the 24th of last month, the proportion of the Korean population who have received at least one dose of the COVID vaccine is only 4%." He added, "If vaccination rates rise to a meaningful level, the introduction of travel bubbles (measures exempting travelers from quarantine between countries with agreements) with some countries will become possible, and limited overseas travel may be feasible as early as the Chuseok holiday season."