[Click eStock] "Hana Tour, Recovery Trend Continues... Favorable Environment for Package Travel"

[Asia Economy Reporter Lee Jung-yoon] Yuanta Securities maintained a buy rating and a target price of 110,000 KRW on Hana Tour on the 4th, judging that the reservation rate and the number of passengers indicators will continue to recover.

Hana Tour's sales and operating profit in the first quarter of this year both fell short of consensus estimates. However, the total number of passengers in the first quarter was about 15,500, up 102.7% year-on-year, and among them, the number of package tour passengers rose 281.7% to 1,664. The reservation rate in May increased by 2,505.4% compared to the previous year, and in June and July, it rose by 2,567.8% and 998%, respectively. The provisional number of passengers for April and May recorded about 13,000 and 15,000, respectively. This is about 3-4% compared to the same period in 2019, but the full recovery period is expected to be the peak season in July.

Lee Jin-hyeop, a researcher at Yuanta Securities, explained, "As the self-quarantine for domestic arrivals has been lifted, demand for outbound travel (citizens traveling abroad) is rapidly increasing," adding, "The biggest hurdle for overseas travel has been removed, but there are still issues such as airline route slot restrictions and mandatory PCR tests in various countries."

He continued, "These restrictions could paradoxically increase the preference for package tours," and said, "Since the speed of increasing regular flight routes is not fast, there is a significant shortage of airline tickets, and travel agencies can utilize charter flights and other irregular flights for their business."

Furthermore, he added, "Due to different policies by country and related PCR test costs and scheduling, the preference for package tours, which can receive assistance from travel agencies, may increase," and "It is also judged that the uncertainty regarding shareholder value dilution has been resolved due to the recently announced paid-in capital increase."