Lee Hyo-sik is Finance Desk editor at The Korea Times. He manages finance-related stories on macroeconomics, banks, stocks, bonds, crypto etc. He is passionate about covering what's happening in Korea's financial industry and explaining it to both Korean and non-Korean readers. You can reach him at leehs@koreatimes.co.kr. Your insights and feedbacks are always appreciated.
Travel stocks booming on surging outbound tourists
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By Lee Hyo-sik
By Lee Hyo-sik
Hana Tour and Mode Tour, the country’s two largest travel agencies, posted their best performances ever in the first quarter on the back of the surging number of outbound travelers, companies said Thursday.
The won’s strength against the yen, the euro and other foreign currencies has made it cheaper for Koreans to travel abroad, they said. In addition, low oil prices have slashed airplane ticket prices, making it more affordable for people to head overseas.
Hana and Mode do not normally deal with Chinese and other inbound foreign visitors.
Hana Tour said a total of 492,385 people went abroad on its package tour programs from January to March, up 24 percent from the same quarter in 2014. About 327,600 people purchased plane tickets from Korea’s largest travel agency, up 40 percent.
The company earned revenue of 118.2 billion won, up 26.1 percent from 93.7 billion won a year earlier, while its operating profit soared 85 percent to 16.8 billion won from 9.1 billion won.
Mode Tour also saw the number of its outbound travelers jump by 27.3 percent to 335,000 in the first quarter from 264,000 the previous year. It sold 56 percent more airplane tickets.
The firm’s revenue reached 50.5 billion won, up 25 percent, while its operating profit soared 115 percent to 6.5 billion won from 3 billion won.
“The number of travelers going to Japan has jumped sharply this year, due to the yen’s weakness against the won, which makes it cheaper for Koreans to travel in the neighboring country,” a Hana Tour spokesman said. “Plane tickets have become more affordable as airlines have lowered fuel surcharge in line with falling oil prices. The emergence of low-cost carriers has offered alternatives to many outbound travelers, which helped lower ticket prices.”
The spokesman said the company will continue to perform strongly in the second quarter. “We performed poorly in the second quarter of 2014 following the sinking of ferry Sewol as many Koreans refrained from traveling. So, from April to June, we will do better over the previous year.”
He then projected that Hana’s revenue will increase more than 20 percent this year from 2014. “We have high expectations for the third quarter as the record number of Koreans will head overseas during the summer holiday season. We will continue to offer affordable and attractive tour packages.”
A Mode Tour spokesman also cited the strong won, the low oil prices and intensifying competition among airlines as factors fueling the ongoing travel boom.
“We expect to continue to perform strongly in the second quarter and beyond,” the spokesman said. “In line with the strong performance, company share prices will continue to head upward for the time being.”
Daishin Security analyst Kim Yoon-jin said shares of Hana and Mode will remain bullish through the third quarter, adding that the brokerage will raise target prices for both companies. “I think share prices will move higher for a while on growing expectations that more Koreans travel abroad, particularly in July and August.”
Kiwoom Securities recently lifted a target price for Hana Tour to 170,000 won per share, while Mira Asset Securities elevated the price for Mode Tour to 45,000 won.
But on Friday, Hana Tour shares closed at 137,500 won, down 1.08 percent from Thursday, while Mode Tour shares fell 2.7 percent to 37,900 won per share.
The benchmark KOPSI dropped 13.83 points, or 0.65 percent, to 2,106.5.