Jeju Air, High Oil Prices Burden... Earnings Improvement to Be Delayed

[Asia Economy Reporter Park Soyeon] Mirae Asset Securities has issued a sell rating on Jeju Air, stating that performance improvement will be delayed this year due to cost burdens. The target price is 18,000 KRW.

According to FN Guide on the 12th, Mirae Asset Securities stated in a recent report that Jeju Air's performance improvement will be delayed this year due to cost burdens.

It is expected that sales will increase by 64.1% compared to the previous year due to the recovery of international routes this year. However, fixed costs are expected to increase due to high oil prices and high exchange rates during the supply increase period, resulting in a 49.3% decrease in operating margin.

Although a reduction in losses is expected in the second half, the performance turnaround is anticipated around 2023. Operating losses of 37.8 billion KRW are forecasted for the third quarter. International routes are expected to recover to about 20% of the pre-COVID-19 level.

Recently, short-term funds were secured through the issuance of perpetual bonds totaling 79 billion KRW. The cash burn is analyzed to continue until the end of the year. Mirae Asset Securities said, "The possibility of additional fundraising remains," adding, "While topline recovery is positive, excessive cost burden relief is necessary."