Korean Investment & Securities analyzed on the 9th that Korean Air cannot succeed alone anymore and now must endure uncertainties with Asiana and low-cost carriers (LCCs). Therefore, the investment opinion remains a buy, but the target price was lowered by 14% to 30,000 won. In the previous trading session, Korean Air closed at 26,500 won.
According to Korean Investment & Securities, Korean Air's stock price has adjusted by 16% in the past month. Concerns over decreased cargo demand due to tariff increases and the burden of rising exchange rates have surfaced. Additionally, the Fair Trade Commission's behavioral measures requiring temporary reductions in long-distance airfare have also increased uncertainties.
However, the contribution of the Americas to Korean Air's passenger revenue soared from 16% in 2019 to 25% in 2024. Accordingly, as the impact of strong dollars or Fair Trade Commission sanctions decreases, Korean Air's profits are expected to remain solid.
However, Choi, a researcher at Korean Investment & Securities, noted, "Now Korean Air is not alone. It must also endure uncertainties with Asiana and LCCs," while revising this year's consolidated operating profit estimate down by 12%. Korean Air's first-quarter performance is expected to meet market expectations.
Choi also stated, "The stock price has dropped to the bottom of the box range over the past two years. The 2025 EV/EBITDA (the value obtained by dividing market value by earnings before interest, taxes, depreciation, and amortization) is undervalued, falling short of four times, so additional concerns are limited," adding, "Ultimately, Korean Air's oligopolistic market dominance will be further strengthened, so we maintain a buy opinion."
He further added, "If uncertainties over tariff increases and Fair Trade Commission measures are resolved in the first half of the year, the next momentum will be for the summer peak season."