[Funding] Hana Tour, Major Shareholder Anxious Over Earnings Below Expectations

Reduction in Fundraising Scale Compared to Plan Due to Stock Price Decline
Platform Advancement Plan Disrupted by COVID-19 Impact
Maintaining Market Position Key After Travel Demand Recovers

[Asia Economy Reporter Hyungsoo Park] Hana Tour is facing setbacks in its fundraising plans targeting shareholders as its stock price continues to decline. This is due to increased volatility in global stock markets and mixed performance outlooks for Hana Tour, which have dampened investor sentiment.

On the 21st, the Financial Supervisory Service's electronic disclosure system reported that Hana Tour set the new share issuance price at 49,800 KRW. This is 22.3% lower than the 64,100 KRW initially expected at the board resolution. The scale of the rights offering followed by a general public offering decreased from 134.6 billion KRW to 104.6 billion KRW.

Hana Tour's stock price slid from its yearly high of 88,990 KRW on April 7 to the low 60,000 KRW range within two months. The decline rate during this period reached about 30%. Compared to the KOSDAQ index's 17.8% drop over the same period, Hana Tour's market-relative returns have been poor.

In the first quarter of this year, Hana Tour recorded sales of 9.8 billion KRW and an operating loss of 29.7 billion KRW. Hyojin Lee, a researcher at Meritz Securities, explained, "Hana Tour's consolidated operating loss in Q1 fell short of market expectations," adding, "The increased costs from Q4 last year have continued into Q1." She further noted, "We are revising upward the assumptions for minimum fixed costs necessary for operations and marketing expenses," and "We are lowering this year's operating loss estimate from 107.5 billion KRW to 114.4 billion KRW."

The travel industry has undergone restructuring due to the impact of COVID-19. Small and medium-sized travel agencies have decided to close as they could not bear fixed costs. As overseas travel demand began to recover, there were expectations that travel demand would concentrate on large travel agencies like Hana Tour. However, it is still early to judge whether Hana Tour will benefit from restructuring based on Q1 results. The expected explosive recovery in overseas travel demand has not materialized due to rising airfare prices and concerns over an economic downturn.

As Hana Tour's performance recovery has been slow, its financial stability is being shaken. As of Q1, the debt ratio worsened to 1204.2% from 645.5% at the end of last year. The reliance on borrowings increased from 57.9% to 65.0%. Net borrowings also rose from 126.4 billion KRW to 138.0 billion KRW.

The Hana Tour board decided to raise funds through a rights offering, use the proceeds to repay debt, and cover operating expenses. The largest shareholder, Harmonia No.1 Limited, will participate in the subscription for 100% of the allocated new shares.

Previously, Harmonia No.1 invested 128.9 billion KRW by participating in Hana Tour's rights offering in March 2020. During the global COVID-19 pandemic, Hana Tour remained in a near shutdown state for two years after this investment decision. Funds intended for future investment were used for survival, delaying the advancement of Hana Tour's travel platform. After the change in the largest shareholder, efforts to improve workforce efficiency deepened conflicts between labor and management.

As the influence of travel tech-based online travel agencies (OTAs) like Expedia and Trip.com grows, experts have differing opinions on whether Hana Tour can regain its former status.

Jiho Choi, a researcher at Samsung Securities, expressed optimism, saying, "As the number one travel agency, Hana Tour will leverage price competitiveness and both online and offline channels," and "It will further expand its market share in the package tour segment and seize opportunities from industry restructuring."

On the other hand, Hyojin Lee from Meritz Securities expressed concern, stating, "The expansion of domestic leisure operators like Yanolja will accelerate the contraction of the package tour market that was observed before COVID-19."

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