[Market Highlight] Korean Air Rises Over 8% on Strong Q4 Performance

Korean Air's stock price is strong following its solid performance in the fourth quarter of last year.

As of 9:31 a.m. on January 16, Korean Air was trading at 24,950 won, up 1,950 won (8.48%) from the previous trading day.

On this day, Mirae Asset Securities maintained its "Buy" investment rating and target price of 29,000 won for Korean Air. Jae Hyun Ryu, a researcher at Mirae Asset Securities, stated, "With a 12-month forward price-to-book ratio (PBR) of 0.7 times, the stock is absolutely undervalued," adding, "In the long term, we can expect a rapid rebound as the company's bargaining power strengthens following the merger and the defense business segment is revalued."

In the fourth quarter of last year, on a separate basis, revenue increased by 13% year-on-year to 4.5516 trillion won. International passenger traffic rose by 9.1%, driven by a 6.6% increase in unit prices. The cargo segment also saw a 4.5% increase in unit price due to higher demand for high-value cargo related to artificial intelligence (AI) and favorable exchange rate effects.

However, operating profit was 413.1 billion won, down 5.1% from the same period last year. Researcher Ryu explained, "Although revenue increased, labor costs rose by 12%, depreciation expenses by 23%, and fuel costs by 4% due to exchange rate effects." He added, "Nevertheless, considering the market had feared operating profit would fall below 400 billion won, the results were better than expected."

Researcher Ryu highlighted strong short-haul passenger demand and the aerospace business. He said, "While uncertainty persists in the cargo segment, the Chinese and Japanese routes, which are less affected by exchange rates, are expected to continue performing well." He also noted, "For European routes, strong demand from Europe to Japan is expected to attract inbound demand and thereby minimize the impact of weak outbound demand."

He added, "Aerospace sales in the fourth quarter improved to 308.2 billion won. Recently, through collaborations with companies such as L3Harris and LIG Nex1, Korean Air is attempting to enter the airborne command and electronic warfare markets. As global supply chains are reorganized and geopolitical instability increases, the defense market is expected to remain robust."