[Click eStock] "Korean Air, Strong Air Cargo Performance Expected in the Second Half"

[Asia Economy Reporter Park Jihwan] Hi Investment & Securities on the 7th presented a 'Buy' investment opinion and a target price of 25,000 KRW for Korean Air, expecting strong air cargo performance in the second half of the year.

Ha Junyoung, a researcher at Hi Investment, evaluated that "In the second quarter, Korean Air paradoxically benefited from the novel coronavirus disease (COVID-19)."

Korean Air's separate financial results showed sales of 1.6909 trillion KRW, a 44% decrease compared to the previous year, but operating profit successfully turned to a surplus of 148.5 billion KRW. Although passenger flights were suspended due to COVID-19, making air cargo transportation via passenger aircraft belly space difficult, the sharp rise in air cargo freight rates brought benefits.

In fact, the air passenger business segment recorded sales of 203.9 billion KRW, down 89.5% from last year due to the impact of COVID-19. With most international flights suspended, the domestic flight sales ratio, which was about 7% in the second quarter of last year, surged to 21%.

The air cargo business segment paradoxically achieved sales of 1.2259 trillion KRW, a 94.6% increase thanks to COVID-19. On the operating cost side, fuel costs are estimated to have plummeted by 79.1% due to the combined effect of falling oil prices and the suspension of passenger flights.

Strong performance in the air cargo business segment is expected to continue in the second half of the year. Researcher Ha Junyoung forecasted, "The air cargo business segment is expected to record operating profits due to its strong performance," adding, "With passenger flights unable to increase due to COVID-19 and air cargo transportation via belly space also difficult, air cargo freight rates will remain strong for the time being."