[Click eStock] "Modetour, Q2 Earnings Slump... Target Price Down 20%"

Poor Performance, Japan Earthquake Warning and Other Adverse Factors
Current Stock Price Attractive at Around 10x P/E Ratio

Hana Securities on the 21st downgraded the target price of Modetour by 20% to 16,000 KRW due to weak second-quarter earnings. However, they maintained a 'buy' rating as the price-to-earnings ratio (P/E) has fallen to around 10 times, making the stock attractive. Modetour's closing price on the previous trading day was 11,510 KRW.

Researchers Kihoon Lee and Jiwon Hwang of Hana Securities stated, "In the short term, both earnings and stock price have been weak due to issues related to TMON and WEMAKEPRICE, as well as the Nankai Earthquake warning in Japan (lifted on the 15th). However, these negative factors have been largely priced in, and given the current stock price has dropped to a P/E of about 10 times based on next year's estimates, the price attractiveness remains high, so we maintain our buy rating."

Modetour's second-quarter revenue was 52 billion KRW, a 45% increase year-on-year, but operating profit turned to a loss of 4.7 billion KRW. This was due to a one-time unsettled cost of 5.2 billion KRW related to TMON and WEMAKEPRICE. In the third quarter, some cancellation costs for hard blocks in related sales channels are also expected to be reflected. The number of package passengers increased by 33% to 245,000, but the average selling price (ASP) fell by 3% to 1.09 million KRW. On a separate basis, operating profit was a loss of 5.2 billion KRW, but the consolidated subsidiaries including overseas branches recorded a profit of 500 million KRW.

Researchers Kihoon Lee and Jiwon Hwang of Hana Securities added, "Although most of the one-time costs were reflected in the second quarter, operating profit for the third quarter is expected to increase by 29% year-on-year to 3.8 billion KRW. However, this is expected to fall short of the consensus estimate of 6.2 billion KRW." Due to some one-time costs related to TMON and WEMAKEPRICE and expected weak demand, the number of package passengers is estimated to remain around 200,000, showing little change from the previous year. Despite a one-time labor cost issue exceeding 8 billion KRW last year, operating profit for this year is expected to decline by 6% year-on-year to 10.9 billion KRW.

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