[Click eStock] "Korean Air, 2Q Surprise Earnings Expected Due to Oil Price Drop... Target Price Up"

Daishin Securities raised the target price for Korean Air from 30,000 won to 33,000 won on the 16th, an increase of 10%. This is because the second-quarter earnings are expected to significantly exceed expectations due to the recent decline in oil prices.

According to Daishin Securities, Korean Air is estimated to record sales of 3.86 trillion won and an operating profit of 551.8 billion won in the second quarter. Compared to the same period last year, sales increased by 12.8%, while operating profit decreased by 25.5%. Although operating profit declined compared to last year, it is about 1.5 times higher than the previous market expectations.

The reason Korean Air is expected to post better-than-expected results in the second quarter is the drop in oil prices. The price of jet fuel in the second quarter was $93 per barrel, lower than the previous estimate of $105, which is estimated to have reduced fuel costs by about 100 billion won. Additionally, passenger demand recovery after the COVID-19 pandemic occurred faster than expected.

Yang Ji-hwan, a researcher at Daishin Securities, said, "Although the EU and the US have expressed concerns regarding the acquisition of Asiana Airlines, it is judged that these are likely to remain mere noise," adding, "The decline in demand and yield in the air cargo sector is also expected to ease as we move into the second half of the year, so now is the time to refocus on Korean Air."