[Click e-Stock] "Korean Air: Strong Profits Despite Oil Price Volatility... Target Price Raised"

Yuanta Securities announced on September 29 that it has raised its target price for Korean Air from 38,000 won to 40,000 won, while maintaining its "Buy" investment rating.

Choi Jiwoon, a researcher at Yuanta Securities, commented on Korean Air, saying, "Despite the increased volatility in oil prices, we expect the company to demonstrate solid profit protection." He added, "Passenger demand for long-haul and premium travel remains robust, while the cargo division has secured stable volume by expanding long-term contracts." He also pointed to the cargo division's relatively strong cost pass-through ability and the easing of foreign currency cost burden due to the strengthening of the Korean won as factors supporting the downside of earnings.

Mid- to long-term improvement in profitability is also anticipated after the planned merger with Asiana Airlines at the end of this year. Researcher Choi said, "With the application of Korean Air's fare system to existing Asiana Airlines routes, there is room for yield improvement, and we expect network efficiency to increase through the adjustment of overlapping routes and schedules." He further analyzed, "In addition, synergy effects in terms of costs, such as joint purchasing, contract integration, and enhanced maintenance efficiency, will likely boost the combined entity's profit-generating capability in 2027 compared to this year."

Korean Air's sales for the third quarter of this year are estimated at 5.0759 trillion won, with an operating profit of 491 billion won. International passenger sales are expected to reach 2.8528 trillion won, up 24.1% from the same period last year. The increase in short-haul traffic, especially to China and Japan, along with continued strength in long-haul and connecting flight demand, is expected to drive improvements in both fares and load factors compared to the previous year.

Cargo sales for the same period are estimated at 1.4759 trillion won, up 38.4%. Researcher Choi noted, "Third-quarter cargo yield is forecast at 664 won, which is down 6% quarter on quarter due to the decline in fuel surcharges, but up 35% year on year." He also stated, "Strong demand for high-value-added cargo, such as semiconductors, is expected to continue, and cargo profitability is also projected to remain solid."

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