[Click eStock] "Jeju Air, Q3 Fare Rebound... Target Price Up"

Possibility of Dividend Resumption Next Year

Hana Securities confirmed a rebound in international airfares for Jeju Air in the third quarter on the 6th, maintaining a 'Buy' investment rating and raising the target price to 12,000 KRW.

Researcher Andohyun from Hana Securities stated, "Third-quarter sales increased by 5% year-on-year to 460.2 billion KRW, while operating profit decreased by 11% to 39.5 billion KRW. Although international airfares fell 3% year-on-year, they rose 10% compared to the previous quarter, which is positive as it indicates a rebound from the previous quarter."

Researcher Ahn forecasted, "Fourth-quarter international airfares are estimated at 71 KRW/km, 4% lower than the third quarter, but further declines are expected to be limited." He analyzed, "In the fourth quarter, the reduced fuel cost per unit will be fully reflected in the performance, so profitability is expected to be similar to the third quarter (operating margin of 8.5%)."

The high possibility of resuming dividends from next year is also positive. Jeju Air announced through a public disclosure that it will convene an extraordinary general meeting in December to propose converting capital reserves into retained earnings. If this agenda is approved, dividends may resume in 2025.

Researcher Ahn explained, "Assuming the resumption of dividends and maintaining the dividend payout ratio, the estimated dividend per share for 2025 would be 420 KRW, with a dividend yield of 4%."

The policy allowing visa-free entry for Koreans into China, effective from the 8th, is also expected to benefit performance. Researcher Ahn said, "The implementation of visa-free entry for China is expected to improve load factors (L/F) on China routes and have a more positive impact on profitability than on sales. It will create new travel demand to China and convert the oversupplied Japan routes to China routes, helping to defend the downside of international airfares."