Modetour, Stock Price Declines Amid Poor Performance

Concerns Over Poor Performance Continuing into Q2 Following Q1
Profitability Declines Due to Increased Aggressive Marketing Expenses

Modetour's stock price is on a downward trend due to poor earnings performance. There are growing concerns that it will fail to meet market expectations in the second quarter as well, following the first quarter. This explains the stock price decline over the past three months.

According to the financial investment industry on the 18th, Modetour's stock price has fallen 21% over five months since reaching its yearly high on February 14. During the previous trading day, it hit a new yearly low at 13,980 KRW at one point. During the same period, Hanatour's stock price dropped by 9%, showing a larger decline compared to its competitor.

Hana Securities estimated that Modetour recorded sales of 54.2 billion KRW and operating profit of 1.5 billion KRW in the second quarter. Compared to the same period last year, sales increased by 39%, but operating profit decreased by 63%. The operating profit is expected to fall short of the market expectation of 4 billion KRW. Lee Ki-hoon, a researcher at Hana Securities, explained, "The number of passengers in the second quarter is estimated to be 245,000, a 33% increase from the same period last year," adding, "Aggressive marketing to expand market share in the ticket segment has led to poor cost control."

Modetour also failed to meet market expectations in the first quarter. It recorded sales of 79.3 billion KRW and operating profit of 5.7 billion KRW in the first quarter. While sales met market expectations, operating profit was about 40% below expectations. Kim Hyun-yong, a researcher at Hyundai Motor Securities, analyzed, "Sales surged as expected due to the recovery in package tour passengers," but "profits were weak due to increased commission fees and marketing expenses."

On the other hand, Hanatour achieved operating profits exceeding market expectations in the first quarter of this year. Hanatour recorded sales of 183.3 billion KRW and operating profit of 21.6 billion KRW in the first quarter. Compared to the same period last year, sales increased by 121% and operating profit by 285%. Researcher Kim explained, "Sales increased by 53% compared to the previous quarter, while major cost items including labor costs were well managed," adding, "They maintained an efficient workforce size and improved profitability."

This contrasts with competitors achieving strong performance through effective cost control. As a result, expectations for Modetour's growth potential are gradually declining. Modetour's outbound market share based on passenger numbers was 7.1% in the first quarter, lower than the pre-COVID-19 pandemic 12-quarter average of 10.0%. The researcher said, "Despite positive restructuring of subsidiaries, ongoing cost issues prevent the company from realizing its full profit potential, which is a regrettable factor," adding, "The reservation growth rate for the third quarter is also somewhat disappointing.