Travel Stocks, 'Smiling Days' Coming in Q2

Hana Tour and Modu Tour Stock Prices Rise Over 15% in 3 Months

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[Asia Economy Reporter Kum Boryeong] An analysis suggests that travel stocks may only rebound in the second quarter.

According to Ebest Investment & Securities on the 20th, Modetour's Q4 results last year are estimated at sales of 69.2 billion KRW and an operating loss of 2.8 billion KRW. Sales decreased by 8.8% compared to the previous year, and operating profit turned to a loss. The number of outbound travelers to Japan slightly improved from -94% in October last year to -85% in December. Hana Tour's situation is similar. Its Q4 sales last year are expected to be 177.7 billion KRW, down 8.3% year-on-year, with an operating loss of 2.7 billion KRW.

In the first quarter of this year, there is still no clear sign of industry recovery. The package reservation growth rate up to March this year, released at the beginning of the year, remains negative except for a positive turnaround due to the Lunar New Year holiday. The high base in Q1 last year, before the deterioration of political exchanges with Japan, also acts as a burden.

However, from the second quarter, a base effect is expected. Ji Inhae, a researcher at Hanwha Investment & Securities, explained, "Travel stocks tend to synchronize more closely with monthly announced package demand than quarterly earnings. From June this year, the base effect accumulated over two years can be applied to the poor sales to Japan caused by natural disasters in Japan starting June 2018 and political exchange deterioration since June last year. There is sufficient potential for a rebound due to regional mix improvement."

Momentum remains. The Tokyo Olympics will be held in Japan in July, and a general election will take place domestically in April. This raises the possibility of improved Korea-Japan relations in the second quarter. Kim Hyunyong, a researcher at Ebest Investment & Securities, said, "When travel demand revives, the number of outbound travelers is expected to surge year-on-year from the third quarter. Travel demand outside Japan grew 9% last year, and there is a very high possibility of improvement in Japan in the second half."

Meanwhile, Hana Tour's stock price, which was 47,850 KRW on October 18 last year, rose 17.87% to 56,400 KRW on the 17th of this month over three months. During the same period, Modetour also increased 15.97% from 15,650 KRW to 18,150 KRW.

This content was produced with the assistance of AI translation services.