Yuanta Securities Korea noted on the 4th that solid performance indicates a promising second half for Korean Air. The target price is 31,000 won, and the investment opinion remains "buy."
Korean Air is expected to report second-quarter standalone revenue of 4 trillion won and operating profit of 415 billion won. This represents a 0.4% increase compared to the same period last year.
International passenger revenue is projected to reach 2.4 trillion won, an increase of 2.5% compared to the same period last year. Demand for international flights, particularly on routes to China and Japan, is expected to show steady growth, with revenue passenger kilometers (RPK) estimated to rise by 5% year-on-year.
Cargo revenue is forecasted to be 1 trillion won, a decrease of 4.6% from the same period last year, attributed to a slowdown in e-commerce demand following the abolishment of the small duty-free system.
Choi Ji-un, a researcher at Yuanta Securities Korea, stated, "With the average price of aviation fuel falling, fuel costs are expected to decrease." However, he noted that due to high exchange rates compared to last year, increased depreciation costs from new equipment, and rising labor costs, the operating profit margin is expected to remain at 10.3%, the same as the same period last year.
He added, "While competition on short-haul routes is intensifying, leading to expected declines in the profitability of LCC subsidiaries, Korean Air’s solid performance and Asiana Airlines are anticipated to turn a profit due to falling fuel prices." He further noted, "Profitability is expected to improve significantly from the second half of the year as the exchange rate stabilizes."