[Click eStock] "Hana Tour, Performance Recovery Still a Long Way Off"

[Asia Economy Reporter Park Jihwan] Kiwoom Securities evaluated on the 5th that Hana Tour still has a long way to go until recovery from the impact of the novel coronavirus infection (COVID-19). They maintained their investment opinion and target price at Buy and 48,000 KRW, respectively.

Namsoo Lee, a researcher at Kiwoom Securities, stated, "Although the deficit has decreased, operating losses continue due to a sharp decline in outbound travelers," adding, "While discussions on travel bubbles are increasing expectations for the resumption of overseas travel, the effect on sales and profit improvement is expected to be limited." He analyzed that, with organizational streamlining, the expansion of losses is expected to be minimal, indicating that a mid- to long-term approach is necessary.

In the third quarter of this year, Hana Tour's sales amounted to 10.1 billion KRW, a 95% decrease compared to the previous year. Operating losses continued at 30.2 billion KRW. Researcher Lee evaluated, "Although the loss margin was reduced compared to the second quarter, avoiding continued deficits was difficult."

In the second and third quarters, compared to the same period last year, the decrease in outbound travelers was 99.6% and 97.8%, respectively, making it impossible to maintain normal operations, forcing reliance on loss reduction through cost-cutting. Lee stated, "Through duty-free business and domestic and overseas subsidiary organizational restructuring, cost increases are expected to be limited, so worsening situations such as expanded losses are unlikely to occur."

Travel bubbles. There is a growing global demand for travel bubbles, which are mutual agreements between countries with well-established quarantine systems and safety from COVID-19, exempting travel restrictions such as self-quarantine. It is known that some European countries and Hong Kong-Singapore have started or are promoting travel bubbles, drawing significant interest domestically for their introduction.

Researcher Lee said, "Travel bubbles will be implemented first with safe countries regardless of past main travel destinations such as Japan, China, and Southeast Asia, making it difficult to target customer segments, but considering the recent popularity of non-stop flight travel domestically and internationally, attracting customers is expected to be not difficult."

Along with this, he forecasted, "Cost reductions from organizational restructuring and the easing of inter-country travel restrictions due to vaccine and treatment development are expected to lead to a significant recovery of losses next year."

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