[Alpha Biz= Reporter Kim Sangjin] On the 6th, Hana Securities raised the target price for Jeju Air (089590) from 110,000 KRW to 120,000 KRW, reflecting a 9% increase due to a confirmed rebound in international fares in Q3. The "Buy" rating was maintained.

Hana Securities reported, "Q3 revenue increased by 5% year-over-year to 460.2 billion KRW, with an operating profit of 39.5 billion KRW (an operating margin of 8.6%), down 11% from the same period last year. Domestic revenue decreased by 1% compared to the previous year, while international revenue grew by 6% to 348 billion KRW."

They noted, "International fares declined by 3% year-over-year but rose 10% quarter-over-quarter to 74 KRW per kilometer, indicating a positive rebound. Despite a 9% year-over-year decline in revenue from Japan routes due to factors like earthquakes and a rising yen, the expansion of Southeast Asia routes successfully defended revenue and profitability."

Looking ahead, Hana Securities estimated, "Q4 international fares will likely be 71 KRW per kilometer, 4% lower than Q3, but we don't expect a significant further decline. With lower jet fuel costs beginning to impact performance, profitability should remain at a similar level to Q3 (8.5% operating margin)."

Additionally, Hana Securities highlighted, "China’s recent decision to allow visa-free entry for South Korean citizens starting November 8th could positively impact load factors (L/F) on China routes. In 2019, Jeju Air was allocated 35 weekly flights to China across nine routes, with 25 weekly flights (seven routes) excluding the Jeju-China route focused on Chinese passengers. The visa-free policy is expected to enhance profitability rather than directly boosting revenue."

 

 

[ⓒ 알파경제. 무단전재-재배포 금지]