[Click eStock] "Korean Air, Growth Driven by Air Cargo in Q4"

Impact of Cargo Supply Shortage Due to COVID-19
Daishin Securities "Maintains Korean Air Target Price at 43,000 Won"

[Asia Economy Reporter Gong Byung-sun] Korean Air is expected to record an operating profit in the fourth quarter of this year that exceeds market consensus by more than 50%. The increase in air cargo during the peak season is interpreted as a positive factor.

On the 29th, Daishin Securities estimated Korean Air's Q4 sales to be 2.8082 trillion KRW, a 47.5% increase compared to the same period last year, and operating profit to be 660 billion KRW, a 57.5% increase over the same period. These figures exceed the respective consensus estimates by 7.22% and 53.49%.

The increased volume of air cargo is expected to contribute to growth. Due to COVID-19, there has been a global shortage of cargo supply. Additionally, overlapping with the peak season, freight rates are expected to reach record highs. Daishin Securities estimated Korean Air's Q4 air cargo sales to be 2.1493 trillion KRW, a 57.9% increase compared to the same period last year. This accounts for approximately 77% of total sales.

The results of the corporate merger review with Asiana Airlines will be announced in the future, but it is realistically expected that the revocation of traffic rights on some routes will not be easy. Yang Ji-hwan, a researcher at Daishin Securities, explained, "Except for Korean Air and Asiana Airlines, there are no domestic airlines that regularly operate medium to large aircraft capable of long-haul routes," adding, "It is impossible to allocate traffic rights to third-country airlines, and prohibiting operation on those routes to regulate monopoly does not align with consumer benefits or national interests."

Meanwhile, the accounting recognition of the sale of the Songhyeon-dong site in Seoul, announced on the 23rd for 557.8 billion KRW, is expected in the second quarter of next year. The purchase price was 290 billion KRW, and the book value is about 400 billion KRW.

Accordingly, Daishin Securities maintained its investment opinion of "Buy" on Korean Air, with a target price of 43,000 KRW. The closing price on the previous day was 29,000 KRW.

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