[Click e Stocks] "Korean Air, Strong Earnings Expected... Expansion of Medium- and Long-Haul Routes"

NH Investment & Securities Report

NH Investment & Securities emphasized expectations for Korean Air's second-half performance on the 4th. Accordingly, it maintained a 'Buy' investment rating and a target price of 33,000 KRW.

Jeong Yeonseung, a researcher at NH Investment & Securities, stated, "The increase in passenger transport volume and high freight rates will offset the decline in cargo sales," adding, "With strong performance expected in the second half, considering the improvement in financial structure and market share expansion through the acquisition of Asiana Airlines, the sustainable profit scale in the mid to long term will also grow further."

Korean Air is expected to see a significant increase in supply starting from the second quarter due to the expansion of medium- and long-haul route transport volume. In the third quarter, international passenger fares are expected to rise again due to strong demand and robust premium demand.

Researcher Jeong evaluated, "The trend of net debt reduction continues, and non-operating profit and loss are stabilizing despite foreign exchange fluctuations." He forecasted that once the acquisition of Asiana Airlines is finalized, market share will expand, and through economies of scale, consolidated operating profit will increase further.

Earlier, Korean Air's first-quarter standalone sales recorded 3.1959 trillion KRW, up 13.9% year-on-year, while operating profit fell 47.4% to 415 billion KRW. Considering the Jin Air results to be consolidated (estimated operating profit of 65.2 billion KRW), the first-quarter consolidated results are estimated to have met market expectations (consensus).

Researcher Jeong predicted, "With the expansion of long-haul routes in the second quarter, international supply will recover to 77% compared to 2019." He added, "Due to the expansion of medium- and long-haul routes with lower average selling prices (ASP), international fares are expected to slightly decline to 124 KRW."

He further added, "Second-quarter consolidated operating profit is expected to reach 280 billion KRW, achieving favorable results unlike past off-seasons."

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