[Click eStock] "Korean Air, Cargo Market Expected to Slow Down After 2Q...Target Price Lowered"

[Asia Economy Reporter Hwang Yoon-joo] Daishin Securities analyzed on the 20th that Korea Air's air cargo market conditions may decline after peaking in the second quarter. Accordingly, it maintained a 'Buy' investment rating but lowered the target price to 33,000 KRW.

Yang Ji-hwan, a researcher at Daishin Securities, stated, "We believe that the company's air cargo business division, which drove surprise earnings from the second quarter of 2020 to the first quarter of 2022, has passed its peak in the second quarter of 2022."

Regarding the reason for expecting the peak to pass, Researcher Yang explained, "Due to the global inflation phenomenon and interest rate hikes in response, consumption contraction and global economic downturn pressures are increasing. Additionally, international passenger routes that had suspended operations during the COVID-19 phase are expected to resume operations starting from the third quarter, leading to an increase in belly space and a consequent easing of air cargo supply and demand."

[Image source=Yonhap News]

Meanwhile, Researcher Yang estimated that second-quarter sales will significantly exceed market expectations, reaching 3.3986 trillion KRW, with operating profit of 661.7 billion KRW.

He analyzed, "This is because the second-quarter air cargo yield (revenue per ton-kilometer of cargo) averaged 857 KRW/km (+53% year-on-year), surpassing expectations, and due to the increase in international passenger demand, the second-quarter international passenger yield and load factor greatly improved, leading to a significant increase in passenger revenue."

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