[Click eStock] Korean Air, Does the Stock Price Alone Signal the End of COVID-19?... Maintaining Market Returns

[Asia Economy Reporter Lee Seon-ae] Daishin Securities announced on the 18th that it maintains its investment opinion on Korean Air as 'Market Perform' with a 6-month target price of 31,000 KRW.

Korean Air's Q1 2021 results on a consolidated basis showed sales of 1.7924 trillion KRW (-26.2% yoy), operating profit of 101.6 billion KRW (turning positive yoy), net loss attributable to controlling shareholders of 53.6 billion KRW (narrowing yoy), and on a separate basis, sales of 1.7498 trillion KRW (-25.6% yoy), operating profit of 124.5 billion KRW (turning positive yoy), which aligned with Daishin Securities' estimated operating profit of 120.2 billion KRW. Market expectations were exceeded. The strong performance in the air cargo segment offset the sluggish domestic and international passenger segments.

Recently, as the government has accelerated the introduction and distribution of COVID-19 vaccines, there is optimism that the onset of herd immunity could occur sooner, leading to a strong stock price performance. However, the recovery of international passenger demand is expected to show gradual improvement starting from the end of Q4 2021. Furthermore, a full recovery to pre-COVID-19 levels is anticipated no earlier than the second half of 2022.

The current market capitalization is approximately 10.6 trillion KRW, which is about 1.6 times the consolidated equity as of the end of Q1 2021, approaching historical peak levels. Researcher Lee Jisoo of Daishin Securities stated, "In a situation where earnings visibility is low, the stock price appears to be reflecting positive scenarios and expectations supported by market demand," adding, "We maintain our Market Perform rating and target price of 31,000 KRW, cautioning against excessive optimism."