[Click eStock] "Korean Air, International Passenger Recovery and Strong Cargo Rates... Earnings Expected to Exceed Forecast"

[Asia Economy Reporter Lee Myunghwan] Daishin Securities announced on the 21st that it maintains a Buy rating and a target price of 33,000 KRW for Korean Air. This is due to the faster-than-expected recovery in passenger demand and the solid trend in cargo yields.

Daishin Securities forecasts Korean Air's operating profit for the third quarter of this year to be 556.8 billion KRW, a 32.9% increase compared to the same period last year. This figure exceeds both Daishin Securities' previous estimates and market expectations. The third-quarter revenue is expected to grow by 63.3% year-on-year to 3.76 trillion KRW.

The reasons for the better-than-expected performance outlook include the rapid recovery in passenger demand and the steady trend in air cargo yields. Korean Air's international passenger transport (RPK) for July and August increased by approximately 340% compared to the same period last year. During the same period, international passenger fares also rose by about 12%. Daishin Securities estimates that air cargo RTK decreased by 14-15% year-on-year, while air cargo yields increased by about 40%.

Daishin Securities expects the recovery in passenger demand to continue mainly on medium- and long-haul routes. Yang Jihwan, a researcher at Daishin Securities, stated, "International passenger demand is recovering rapidly, centered on long-haul routes to the Americas and medium-haul routes to Southeast Asia," adding, "Fares and cargo load factors (L/F) are expected to maintain a solid trend."

Regarding cargo yields, it was diagnosed that yields are showing a favorable trend due to reduced flight operations. Researcher Yang analyzed, "The air cargo sector is experiencing a decline in transport volume due to the global economic slowdown," but added, "Because of the reduction in dedicated cargo passenger flights and the slow increase in flights from China, yields are maintaining a more robust level than expected."