[Click eStock] "Jin Air, Direct Hit from New Coronavirus... 'Peak Season Effect Disappears'"

[Asia Economy Reporter Park Ji-hwan] NH Investment & Securities evaluated that Jin Air lost the peak season effect due to the impact of the novel coronavirus infection (COVID-19). Accordingly, it maintained a 'Neutral' investment opinion and a target price of 15,000 KRW.

Jeong Yeon-seung, a researcher at NH Investment & Securities, explained, "Demand, which was expected to intensify from February due to the spread of COVID-19, deteriorated, causing the peak season effect in the first quarter to disappear. As the virus spread throughout China and neighboring countries, cancellations appeared on all international routes, led by the China routes, starting in February."

He stated, "Considering the past SARS case, a decline in passengers lasted about two months, with a decrease of up to 40% year-on-year on international routes." Researcher Jeong estimated that Jin Air's sales this year would increase by 6.4% year-on-year to 968 billion KRW, while operating losses would rise by 3.2% year-on-year to 31 billion KRW.

The difficulty in acquiring new aircraft and routes due to sanctions by the Ministry of Land, Infrastructure and Transport (MOLIT) was also evaluated as a negative factor.

Researcher Jeong explained, "Due to MOLIT sanctions in August 2018, the number of operating aircraft has remained stagnant at 26. In the fourth quarter, international passenger ASK (Available Seat Kilometers) and RPK (Revenue Passenger Kilometers) decreased by 8.7% and 7.8% year-on-year, respectively," adding, "International fares are estimated to have fallen by 20.5% compared to the previous year."

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