[Click eStock] "Jeju Air, Concerns Over Profit Momentum Slowdown... Target Price Down"

Target Price Lowered by 13% Compared to Previous Level

NH Investment & Securities on the 27th downgraded the target price of Jeju Air from 9,200 KRW to 8,000 KRW, citing a slowdown in profit momentum due to a decline in passenger load factor following an accident and fare reductions amid intensified competition. The investment rating was maintained at 'Hold.'

Researcher Jeong Yeonseung of NH Investment & Securities explained, "Following the aircraft accident, we lowered the 2025 operating profit estimate by 47% to 48.3 billion KRW, reflecting a reduction in available seats and a drop in the passenger load factor in January, the peak season of the year. The target price was also adjusted downward by 13% compared to the previous level."

Jeju Air's sales in the fourth quarter of last year increased by 6.5% year-on-year to 450.4 billion KRW, but it posted an operating loss of 40.3 billion KRW, turning to a deficit and falling short of market expectations. Researcher Jeong analyzed, "International Revenue Passenger Kilometers (RPK) increased by only 0.8% year-on-year, and international fares dropped by 10.1%. Although detailed operating costs were not disclosed, it is estimated that expenses were higher than expected."

The peak season effect is also expected to be absent in the first quarter of this year. Researcher Jeong stated, "Despite the first quarter being the peak season, it will be difficult to enjoy the peak season effect due to a reduction in available seats after the accident, refunds, and price cuts. However, the extent of fare declines is expected to narrow in the second half of the year."

The passenger load factor, which plummeted to 75% in January, is expected to gradually recover, but concerns remain over a slowdown in profit momentum due to intensified competition. The researcher said, "There are concerns about a slowdown in profit momentum due to fare reductions caused by intensified competition among low-cost carriers, mainly on short-haul routes. Jeju Air is also worried about a partial reduction in available seats and price competition outside of long holiday seasons."