[Click eStock] "Jin Air, 2Q Earnings Also Below Expectations Due to Rising Labor Costs"…Target Price ↓

Daishin Securities lowered its target price for Jin Air from 25,000 won to 20,000 won on the 18th, citing the reflection of rising labor costs in the downward revision of operating profit estimates for this year and next. However, it maintained a buy rating.

Jin Air's labor costs for the second quarter of this year were approximately 43.4 billion won, an increase of about 8.6 billion won compared to the previous quarter. The international passenger yield in the second quarter was 81.2 won per km, which was 6.6 won lower than Daishin Securities' estimate of 87.8 won per km.

Jin Air's second-quarter sales increased by 105% year-on-year to 259 billion won, and operating profit turned positive to record 17.8 billion won, falling short of expectations. Yang Ji-hwan, a researcher at Daishin Securities, said, "The reason is the increase in labor costs due to a 10% wage increase and an increase in the number of employees, as well as a decline in international passenger yields." He added, "International passenger supply was 2.31 billion km, transportation was 1.99 billion km, load factor (L/F) was 86.2%, and yield was 81.2 won per km."

Researcher Yang also stated, "Although the second-quarter performance fell short of expectations, it was already predictable from the increase in labor costs announced during the performance report of the affiliate Korean Air, so it is judged that this has already been reflected in the stock price." He added, "Rather than concerns about yield peak-out, attention is focused on the normalization of China routes, increasing demand, and valuation attractiveness."

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