Shares of South Korea’s leading travel agency Hana Tour Service Inc. have gained traction on improvement in income from package tour programs and scale-down in its money-losing duty-free business.

According to Hana Tour and Shinhan Financial Investment on Tuesday, the number of people opting the company’s tour packages in the first quarter this year amounted to 970,000, up 25.4 percent from a year ago. Shinhan Financial Investment estimates the figure would also increase by 20.5 percent on year to 840,000 in the second quarter.

Hana Tour attributed the successful package tour business to its theme-based tour packages that are gaining popularity from travelers. Last year, it set up a theme-based tour planning team responsible for making various tour package products aiming to meet different preferences and interests of tourists.

Thanks to the brisk package tour business, Hana Tour is expected to record an operating profit of 48 billion won ($42 million) this year, up 57.9 percent from the previous year and exceeding 40 billion won for the first time in its history, according to market data provider FnGuide. Its revenue would reach 447.4 billion won, up 16 percent over the same period.

“Hana Tour has solidified its number one position in the nation’s travel industry, with its package tour business accounting for 11 percent in the local market,” said Cho Gyeong-jin from HI Investment & Securities. “The number of travelers would be on a steady increase in the latter half, boosted by a rise in travel demand during school vacation and long holidays.”

The travel agency has also decided to downsize its duty-free business that has dented its profitability. It started the business in July 2015 but the division has made losses of more than 6 billion won every quarter since last year.

“The one-off expenses related to the scale-down of duty-free business initiated in April would be reflected to the earnings in the first half,” said Sung Joon-won from Shinhan Financial Investment. “It would cause about 10.1 billion won in loss in the second quarter, but the deficit would be narrowed to below 5 billion won starting the third quarter,” he added.

Its operating profit on a consolidated basis is expected to reach 41.6 billion won on sales of 686.3 billion won this year, up from 20.9 billion won and 595.5 billion won respectively in 2016.

So far this year, the Kospi-listed Hana Tour Service shares jumped 41.8 percent.

Shares of Hana Tour closed Wednesday at 91,600 won, up 1.1 percent or 1,000 won from the previous session.

By Yoon Jin-ho

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]