[THE INVESTOR] Korean Air’s earnings in the third quarter will satisfy market consensus, said Korea Investment and Securities on Oct. 23 maintaining a “buy” recommendation and 39,000 won (US$34.38) target price.
Its revenue in the period will rise 7 percent on-year to 3.45 trillion won while operating profit will slip 1.5 percent to 350.2 billion won. The figures are fairly decent considering the challenging environment including oil price rise and natural disasters in Japan. The average price of jet fuel surged 40 percent on-year in the third quarter but Korean Air managed to reduce the burden by shrinking its supply. Despite slow demand for destinations in Japan, passenger rate has increased as it has lessened its services since August. The unexpected hike in passenger rate has offset the oil price rise, said analyst Choi Go-un.
Its current stock price is excessively undervalued at only 1.0 time its price-to-book ratio, pointed out the analyst.
By Hwang You-mee (email@example.com)