April 27, 2024

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[THE INVESTOR] Korean Air’s profits and cash flow will improve simultaneously in the fourth quarter, said Mirae Asset Daewoo on Sept. 20, maintaining a “buy” recommendation and 46,000-won target price. 

Its revenue in the third quarter will rise 7.5 percent on-year to 3.35 trillion won but operating profit will miss market expectations at 461.1 billion won dragged down by the drop in international passenger fare rate and oil price rise, said analyst Ryu Je-hyeon.

Meanwhile, operating profit in the fourth quarter will hike 27.8 percent on-year to 227.8 billion won as the cargo sector enters high season and along with the passenger service boom next month will propel the earnings, said the analyst. 

As the airline company cuts back on investment in fleet and concludes investment in a hotel in Los Angeles, cash flow will improve and in the long term, combined with lower debt-equity ratio and better credit rating, will contribute to promoting shareholder value, according to Ryu.

Its current stock price is low reflecting the drop in demand due to geopolitical uncertainties and concerns over possible cap on cargo supply, but will rebound on the back of improved cargo rates, added the analyst. 

By Hwang You-mee (glamazon@heraldcorp.com)