[Click eStock] 'Earning Surprise' Korean Air, Cargo and International Flights Expected to Perform Well

[Asia Economy Reporter Lee Myunghwan] Hana Financial Investment announced on the 28th that it maintains a buy rating and a target price of 41,000 KRW for Korean Air, expecting the strong demand for air cargo to continue.

In the fourth quarter of last year, Korean Air recorded sales of 2.9 trillion KRW and an operating profit of 703.8 billion KRW. These figures represent increases of 26.2% and 67.5% respectively compared to the previous quarter. Due to the sharp rise in cargo freight rates, cargo sales hit an all-time high, resulting in the highest quarterly operating profit ever. The market had initially expected an operating profit of 561.7 billion KRW.

Hana Financial Investment forecasts that the cargo division will continue to perform well in the first quarter of this year. This is because air cargo demand remains strong even after the peak season in the fourth quarter. Researcher Park Seongbong of Hana Financial Investment analyzed, "Logistics disruptions caused by the spread of COVID-19 in major countries persist, and container ship freight rates remain at high levels."

Hana Financial Investment also expects international flight demand to recover in the second half of this year. Researcher Park said, "Due to the impact of the Omicron variant, it is expected to be difficult for international passenger demand to fully recover in the short term," but added, "Domestic airlines are expanding flights mainly on vacation routes such as Hawaii and Saipan, where self-quarantine is exempted, and the UK recently announced plans to ease quarantine measures, so international flight demand recovery is expected in the second half."

He continued, "Due to the prolonged logistics disruptions in major countries, strong demand for air cargo is expected to continue for some time," adding, "As international flight demand recovers toward the second half, strong performance is expected to continue this year as well."