[Click eStock] "Korean Air Expects Operating Profit to Exceed This Year's Expectations"

[Asia Economy Reporter Park Jihwan] Ebest Investment & Securities on the 16th presented a 'Buy' investment opinion and a target price of 24,500 KRW for Korean Air, expecting this year's operating profit to be higher than market expectations.

Researcher An Jina of Ebest Investment & Securities stated, "Despite the novel coronavirus infection (COVID-19), the consolidated second-quarter results are expected to show sales of 2.756 trillion KRW, down 11.7% from the previous year, and operating profit in the second quarter is expected to turn positive at 100.7 billion KRW, recovering from a first-quarter loss." The turnaround to profit in the second quarter is attributed to a sharp rise in cargo freight rates due to tight cargo supply and demand, reductions in fuel and labor costs, and overall cost reductions due to weak passenger demand.

This year's annual operating profit was also revised upward from previous estimates. Considering the prolonged COVID-19 pandemic and the realistic difficulty of passenger demand recovery within the year, the shortage of cargo supply is likely to continue. Although the increase in cargo freight rates peaked in May and is somewhat moderating, the freight rate level is expected to remain high due to limited passenger cargo supply.

Researcher An Jina said, "Considering the capital increase (1.1 trillion KRW), sale of the in-flight business division, issuance of CB and ABS (1 trillion KRW), and the possibility of term fund support, liquidity risk compared to competitors is also limited," and added, "As the second half progresses and cargo unit prices decline, Korean Air is expected to maintain stable performance by securing fixed demand and expanding volume acquisition."

This content was produced with the assistance of AI translation services.