[Click eStock] "Jeju Air, Capital Increase Is a Planned Step... Target Price Downgraded"

Samsung Securities Issues 'Hold' Investment Opinion and Sets Target Price at 14,000 Won... Closing Price on 21st at 19,600 Won

Photo by Asia Economy DB

[Asia Economy Reporter Geum Bo-ryeong] Jeju Air's announcement of a 170 billion KRW rights offering is seen as a planned step.

On the 22nd, according to Samsung Securities, Jeju Air announced a 170 billion KRW rights offering for operating funds and debt repayment. The planned issue price is 14,000 KRW per share. Of the funds raised through the rights offering, 100 billion KRW will be used for operating funds and 70 billion KRW for debt repayment. Kim Young-ho, a researcher at Samsung Securities, explained, "The rights offering was somewhat expected given the airlines' need to strengthen capital and the government's basic policy on financial support. Since Jeju Air also meets the requirements for the government's key industry stabilization fund, additional government support is expected, so securing short-term funding should not be difficult."

The remaining uncertainty is whether Jeju Air will acquire Eastar Jet. Due to the COVID-19 pandemic, the industry is experiencing its worst conditions ever, making the decision difficult. Researcher Kim said, "From Eastar Jet's perspective, the conditions are not easily acceptable, so the deal closing is expected to be delayed."

Samsung Securities has given Jeju Air a 'Hold' investment rating. The target price was lowered from 17,000 KRW to 14,000 KRW. The closing price on the 21st was 19,600 KRW.

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