[Click eStock] "Jin Air, Earnings Expectations Fall Short Due to High Oil Prices... Target Price Down"

Daishin Securities lowered the target price for Jin Air from 20,000 won to 16,000 won on the 21st. The investment rating was maintained as 'Buy.'

Jin Air's operating profit for the third quarter stood at 32.6 billion won, significantly missing the market expectation of 45 billion won. Compared to the third quarter of 2019, before COVID-19, international flight supply was about 83.3%, and passenger volume was 90.2%. However, during the same period, maintenance costs increased by 177.5%, and labor costs rose by 36.5%, which is a much larger increase than supply and passenger volume. This is presumed to be due to inflation, rising oil prices, exchange rates, and wage increases.

Reflecting the poor performance, Daishin Securities also lowered its annual operating profit estimates for this year and next year by 12.6% and 19.4%, respectively.

Yang Ji-hwan, a researcher at Daishin Securities, said, "Although international passenger demand continues to show a solid trend in the fourth quarter, as confirmed by the third-quarter results, the increased cost structure compared to the pre-COVID period is the key issue," adding, "An increase in yield must support profitability to meet market expectations."