"Maximizing Short-term Performance Uncertainty" Jeju Air Investment Opinion and Target Price ↓ - LS Securities

[Financial News] LS Securities downgraded Jeju Air's investment opinion from buy to hold, stating that "short-term performance uncertainty has been maximized due to increased profit and loss instability." The target stock price was also lowered to 7,600 won.
On the 27th, Jaehyuk Lee, a researcher at LS Securities, explained, "Short-term performance uncertainty has been maximized due to reduced flights and fare discounts following the airline accident, as well as increased profit and loss instability related to the air cargo business," adding, "At a time when the performance burden of low-cost carriers (LCCs) has increased due to rising exchange rates and operating costs, downward pressure has intensified across both seat supply and fares."
This year's first quarter sales were 385 billion won, a 22.4% decrease compared to the same period last year, and the operating loss was 33 billion won. The expected annual sales for this year are 1.563 trillion won, a 19% decrease compared to the same period last year, with an operating loss expected to be 50 billion won.
The researcher analyzed, "It seems that reduced flights will be maintained until the off-season of the second quarter this year," and "the timing of performance normalization after the peak season of the third quarter will be a variable."
He continued, "As the conditions for delivery have improved, such as resuming the delivery of new equipment, it is expected that operational efficiency will gradually improve," and "compared to competing LCCs, the business capabilities on China routes are excellent, so it is expected to benefit from visa-free entry of Chinese tourists in the third quarter."   

koreanbae@fnnews.com Bae Hangul Reporter