[Click eStock] "Korean Air, No Short-Term Momentum for Stock Price Increase"

Target Price Lowered from 33,000 KRW to 28,000 KRW

Daishin Securities downgraded the target price for Korean Air from 33,000 KRW to 28,000 KRW, citing the uncertainty of international passenger fare increases and the lack of short-term stock price momentum. The investment rating was maintained as 'Buy.'

Korean Air recorded separate basis sales of 3.96 trillion KRW and operating profit of 350.9 billion KRW in the first quarter, falling short of market expectations. Yang Ji-hwan, a researcher at Daishin Securities, explained, "The main reasons for the poor performance are ▲decline in air cargo volume ▲one-time performance bonuses related to the Asiana Airlines acquisition (about 40 billion KRW) ▲increase in depreciation expenses," adding, "Depreciation expenses increased more than expected due to the introduction of new aircraft models last year, and air cargo volume is estimated to have decreased due to the US-China tariff war."

The 'Integrated Korean Air,' which acquired Asiana Airlines last year, is currently under investigation by the Fair Trade Commission's Compliance Monitoring Committee regarding structural and behavioral corrective measures, leading to uncertainty about future international passenger fare increases. Researcher Yang said, "The structural corrective measures concern five routes to the Americas and six routes to Europe. The structural measures for Europe are expected to be completed in the first half of the year, but the Americas are expected to be affected until the second half," and added, "For stock price growth, it will be necessary to secure visibility of the impact of tariffs and the performance of Integrated Korean Air."

However, improvement in consolidated performance due to the Asiana Airlines acquisition is a positive factor. Researcher Nam said, "Since Asiana Airlines has been consolidated from the first quarter, consolidated sales are expected to increase significantly compared to the same period last year," estimating first-quarter consolidated sales at 6.566 trillion KRW and operating profit at 476.4 billion KRW. Annual sales for this year are expected to be 26.2707 trillion KRW, with operating profit at 1.9373 trillion KRW.