[Hidden Market Picks] Jeju Air to fly higher in 2018

2018.01.25 14:29:59 | 2018.01.25 15:45:35

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Jeju Air Co. (Kospi: 089590), South Korea’s leading budget carrier, is expected to benefit from changes in lifestyles of Koreans enjoying short-distance trips and rise in domestic flight fares.

The carrier likely outperformed earlier estimates for the fourth quarter with an operating profit of 18.3 billion won ($17.2 million), which would be up a whopping 329 percent from a year-ago period as flight travelers hit record-high during the 10-day lengthy holiday week for Chuseok early October, according to Samsung Securities Co. Wednesday. Revenue in the fourth quarter has been revised up to 229 billion won, up 29.7 percent on year.

International flight passengers are estimated to have jumped 32.9 percent in the fourth quarter. Domestic flight business will likely gain 9.3 percent this year due to higher fares, according to Samsung Securities.

For full 2017, the company is estimated to have earned 102 billion won in operating profit on revenue of 982 billion won. The bottom and top lines are likely go higher to 138 billion won and 1.24 trillion won, respectively, this year.

On rosier prospects, Samsung Securities upped the stock’s target price to 49,000 won from previous 47,000 won. Jeju Air shares on Thursday ended 0.39 percent up at 38,350 won from the previous session.

Jeju Air is expected to maintain the lead in the pack of budget names by keeping up competitive edge through economies of scale. As of the third quarter last year, flights to Japan reached 26.6 percent. It plans to add eight aircrafts in 2018 and at least six a year until 2020 to secure a fleet of 50.

Its acquisition of ground handling service agent Dongbo Air Group in October last year will also pay off in this year’s bottom line.

Jeju Air’s return on equity (ROE), a measure of profitability, and earnings per share (EPS) are expected to hover above 20 percent and 30 percent, respectively.

For more information, please contact Kim Young-ho, analyst, Samsung Securities at +82 2 2020 7853, youngho52.kim@samsung.com [mailto:youngho52.kim@samsung.com] or visit Financial Supervisory Service (http://englishdart.fss.or.kr/). company details and latest quarterly report can be searched under JEJUAIR or 089590.

Latest trading data is available via Korea Exchange (http://englishdart.fss.or.kr/) under JEJUAIR or 089590.

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