[Click eStock] "Korean Air, Earnings Surprise Thanks to Cargo"

Hana Financial Investment Presents Investment Opinion 'Buy' and Target Price of 28,000 Won... Closing Price on the 7th at 19,100 Won

Korean Air passenger plane (Photo by Asia Economy DB)

[Asia Economy Reporter Geum Bo-ryeong] Korean Air recorded an earnings surprise in the second quarter thanks to its cargo division.

According to Hana Financial Investment on the 10th, Korean Air's separate basis sales in the second quarter were 1.7 trillion KRW, and operating profit was 148.5 billion KRW. Sales decreased by 44% compared to the previous year, but operating profit turned positive.

The cargo division benefited from the COVID-19 pandemic. Due to the sharp decline in overseas travel demand caused by COVID-19, Korean Air's international passenger transport (RPK) in the second quarter fell by 93.6% compared to the same period last year. On the other hand, exports of items related to the K-quarantine industry, such as masks and protective suits, increased, resulting in a 17.3% rise in cargo transport (FTK). Along with this, Korean Air's cargo yield in the second quarter surged by 74.8% year-on-year, driving the overall earnings surprise.

The operating environment is expected to worsen again in the third quarter. Park Sung-bong, a researcher at Hana Financial Investment, said, "Although the number of countries lifting entry bans on Koreans is slightly increasing, the spread of COVID-19 in overseas countries is still ongoing, so a full-scale resumption of overseas travel will be difficult in the third quarter as well. In the case of cargo, exports of K-quarantine products, which played a key role in the second quarter, are decreasing, while exports of existing cargo including semiconductors are recovering. However, the second quarter saw a sharp rise in freight rates due to emergency orders, and recently, cargo transport capacity via passenger planes has expanded, so cargo freight rates peaked in May and have turned downward, with further declines expected in the third quarter," he explained.

Hana Financial Investment gave Korean Air a 'Buy' rating with a target price of 28,000 KRW. The closing price on the 7th was 19,100 KRW.

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