[Click eStock] "Modetour Expected to Record Largest Loss in Q2"

[Asia Economy Reporter Oh Ju-yeon] Kiwoom Securities forecasted on the 16th that Modetour will record its worst-ever period as it continues to incur losses, with an operating loss of 9.2 billion KRW in the second quarter of this year. Although strategic cost reductions are helping to curb the expansion of losses, the prolonged impact of COVID-19 is expected to delay the timing of sales recovery, leading to a challenging year ahead.

Modetour's sales in the second quarter of this year are projected to be 3.7 billion KRW, a 94.7% decrease compared to the same period last year, with an operating loss expected to reach 9.2 billion KRW. The total number of departures in the second quarter dropped by more than 98% year-on-year, and the reservation rate showed a similar level, indicating virtually no demand for overseas travel for the time being. Modetour plans to implement unpaid leave and other measures to reduce costs, but considering that labor costs have already been cut by about 20% compared to the same period last year, there is little room left to further reduce losses through these measures.

However, the current efforts to improve cost efficiency are expected to translate into profitability improvements when the number of departures increases next year. Additionally, the position of large companies amid industry restructuring is expected to remain solid. The target stock price was lowered from 21,000 KRW to 17,000 KRW, but the investment rating of 'Buy' was maintained.

Researcher Lee Nam-su stated, "Even if COVID-19 is resolved through vaccines and treatments, the shift from package tours to Free Independent Travelers (FIT) will continue, and travel demand will arise regardless of distance based on safety levels due to the long-term disruption of overseas travel," adding, "Travel will expand in the order of the government’s official declaration of safe travel areas → increase in FITs avoiding large-scale contact → priority increase in small group packages."

He continued, "From the perspective of travel agencies planning and recruiting for package tours, strategic responses are necessary to secure outbound customers from the early stages of travel resumption."

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