[Click eStock] "Air Busan, Record-Breaking Earnings Expected... Stock Undervalued"

[Asia Economy Reporter Kwon Jaehee] Kiwoom Securities evaluated Air Busan on the 6th, stating that "there is sufficient room for further growth due to the steep profit growth trend." No separate investment rating (Not Rated) was assigned.

Air Busan is expected to achieve its best-ever performance in the first quarter of this year. The first quarter sales are projected to be 213.4 billion KRW, and operating profit is expected to be 41.8 billion KRW. Sales increased by 567.7% compared to the previous year, and operating profit turned positive. Thanks to the sharp recovery in air passenger demand continuing since the fourth quarter of last year, domestic passengers in January reached 370,000, and international passengers reached 250,000. Considering that the average airfare for domestic and international routes is estimated to be approximately 50,000 KRW and 200,000 KRW respectively, January sales are estimated to be around 75 billion KRW. The operating profit margin exceeded 20%, as the highly profitable Japan route recorded a high load factor of over 90%. In February, despite a 10% decrease in flight supply, performance slightly decreased compared to January but remained strong due to high load factors. Even in March, entering the off-season, a load factor of over 80% is expected, and sales are projected to exceed the break-even point (BEP).

In particular, the main routes to Japan and Southeast Asia are expected to continue steep profit growth due to high travel demand and airfare. This year, sales are expected to reach 807.8 billion KRW, and operating profit 96.9 billion KRW, representing a 99.5% increase in sales compared to the previous year and a turnaround to profitability, achieving the best-ever performance.

Researcher Han-gyeol Lee of Kiwoom Securities stated, "Annual performance growth will continue due to the recovery of China routes, new long-haul routes such as Singapore, increased flights on the high-profit Japan route, and steady airfare maintenance," adding, "Despite the forecast of record-high performance, the stock price is undervalued at a 2023 price-to-earnings ratio (PER) of 8.8 times compared to global low-cost carriers (LCCs)."