April 20, 2024
Stocks & Bonds
[EQUIITES] ‘Jeju Air’s profit to shrink’
[THE INVESTOR] Jeju Air’s profits will decline and the stock price lacks momentum, said KTB Investment and Securities on Feb. 20, downgrading its recommendation to a “neutral” from a “buy” and lowering the target price to 28,000 won (US$24) from 32,000 won.
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Despite the decent passenger load in the fourth quarter last year, Jeju Air’s earnings were slowly dented by spending, including incentives. Its operating profit this year will shrink further as the rise of costs such as fuel will be larger than the increase of its revenue, forecast analyst Lee Han-jun.
The low-cost carrier will maintain its strategy that secures load by lowering the margin, but the increase of revenue could be slower than that of load, said Lee.
However, Jeju Air can generate steady profits bolstered by its healthy financial structure and over 300 billion won cash reserve, noted the analyst, adding that in the long-term it can also gain from the freeing up of Chinese sky.
By Hwang You-mee (glamazon@heraldcorp.com)
