Published 26 Apr.2023 08:31(KST)
Hana Securities on the 26th forecasted that Korean Air will continue a stable trend due to a slowdown in the decline of cargo sales and strong demand for international flights. Accordingly, it maintained a buy rating and a target price of 34,000 KRW.
Seongbong Park, a researcher at Hana Securities, stated, “In the case of air cargo, demand has fallen to pre-COVID-19 levels, and as the perception of a bottom expands, the decline in sales will no longer be significant.”
Korean Air’s first-quarter revenue and operating profit were estimated at 3.7 trillion KRW and 433.8 billion KRW, respectively. Compared to the same period last year, revenue increased by 27.0%, but operating profit decreased by 43.9%. In particular, operating profit is expected to fall short of the market consensus of 465.8 billion KRW.
Researcher Park said, “Due to the increase in overseas travel demand following the worldwide lifting of quarantine measures, Korean Air’s international passenger transport (RPK) is estimated to have recovered to 69.6% of the first quarter of 2019, while the international flight load factor also rose to 83.8%.”
He added, “In the case of cargo, the transport volume (FTK) and yield declined by 9.2% and 15.2%, respectively, compared to the previous quarter, resulting in a decrease of 429.7 billion KRW in cargo sales compared to the fourth quarter.”
It is expected that the differentiation in trends between international flights and cargo will continue into the second quarter. Passenger transport on the Japan route in March reached 973,000, steadily increasing compared to the previous month since October 2022, while passenger transport to China increased by 58.7% month-on-month, marking the beginning of a recovery phase.
He evaluated, “Although still at a level incomparable to the pre-COVID-19 period, the mutual lifting of entry restrictions between Korea and China from the end of February and the sequential agreement on increased flights starting in March have had a positive effect.”
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