[Click eStock] "Aviation Stocks Should Seize Currency and Demand Concerns as Opportunities"

Hana Securities analyzed on the 5th that the recent high exchange rate and concerns about air travel demand should be seen as an opportunity for airline-related stocks.

Although the martial law was lifted as of the previous day, some countries including the United States and Japan continue to advise their citizens to exercise caution when traveling to Korea, maintaining concerns. Do-hyun Ahn, a researcher at Hana Securities, stated, "Since yesterday, there has been almost no movement to cancel inbound or outbound air tickets to Korea," and diagnosed that "the impact on air travel demand is limited."

Researcher Ahn further commented on the recently surged exchange rate due to political uncertainty, saying, "A higher exchange rate is negative for airlines both in terms of demand and costs. A high exchange rate suppresses outbound travel demand." However, he added, "The exchange rate is expected to stabilize downward in the future. Since oil prices are falling and easing the burden of fuel costs, the impact of the exchange rate will not be significant nor long-term."

Researcher Ahn said that concerns about the exchange rate and air travel demand can be viewed as a buying opportunity at the bottom. He predicted, "Next year's airline industry conditions will not face strong competitive pressure due to aircraft supply disruptions, and especially the shortage of medium-to-large aircraft will continue for 2 to 3 years, so fares on long-distance routes will remain firm." He also noted, "Although the exchange rate was high from April to July, travel demand remained robust, so additional demand concerns due to the high exchange rate will also be limited." He added, "Currently, the 12-month forward price-to-earnings ratios (PER) of Korean Air, Jeju Air, and Jin Air are 7 times, 5 times, and 4 times respectively, indicating high valuation attractiveness. It is a valid time for a bottom-buying strategy."