[Click eStock] "Modetour, Steep Recovery of Travelers... Value Burden Remains"

[Asia Economy Reporter Kwon Jae-hee] Hyundai Motor Securities maintained its market perform rating and target price of 18,000 KRW for Modetour on the 14th.

Modetour's package tour dispatch number in the first quarter is expected to reach 190,000, more than double the 90,000 in the previous quarter. This corresponds to 30% compared to the first quarter of 2019, indicating a rapid recovery in travel demand. The number of outbound travelers this year is projected to be between 22 million and 23 million, recording more than 75% of the outbound travelers in 2019. Accordingly, the number of package tour dispatches is expected to surge to 550,000 in the fourth quarter, which is 80% of the fourth quarter of 2019. Operating profit turnaround is also likely to be achieved as early as the second quarter.

Currently, the proportion of people in their 20s to 40s among Modetour's package tour dispatches is about 30%, which is twice as high as before COVID-19. The initial recovery in travel demand after the endemic is led by the younger generation, and from the second half of the year, customers aged 50 and above are expected to actively join overseas travel, accelerating Modetour's performance recovery.

With about 600 sales personnel currently, Modetour can handle a monthly package tour dispatch number of 90,000. Therefore, from the third quarter, when the quarterly dispatch number will far exceed 300,000, the need for additional staffing is expected to arise. Although breaking the breakeven point due to rapid sales growth is sufficient within this year, the quarterly operating profit is expected to remain at around 3 billion to 6 billion KRW due to increased labor costs in the second half. The point at which operating profit returns to the pre-COVID level of over 10 billion KRW per quarter is expected to be from the second half of 2024.

Hyun-yong Kim, a researcher at Hyundai Motor Securities, analyzed, "Even compared to the profit estimates for 2024 when the industry is expected to fully normalize, the current stock price has a valuation burden with a price-earnings ratio (PER) of 26 times. However, the confirmed improvement in financial structure is positive, and with high visibility of a turnaround in the second half, there will be merit at a PER below 20 times."