Hana Securities raised its target price for Korean Air (KRX: 003490) from 32,000 won to 38,000 won on the 23rd, maintaining a Buy recommendation.
The brokerage expects the airline to post a second-quarter operating profit on a standalone basis, even as jet fuel prices have roughly doubled compared with pre-conflict levels. Cargo freight rates rose 40% year on year, with cargo volumes up 3%, providing a meaningful offset.
Hana Securities estimates Korean Air's standalone second-quarter operating profit at 64.7bn won, implying an operating margin of 1.3% — an 84% decline year on year. Fuel costs surged 94%, pushing total operating expenses up 32%.
For the same period, international passenger revenue is estimated to have risen 10% year on year to 2.508tr won, while cargo revenue is forecast to have jumped 44% to 1.515tr won. However, the passenger segment is expected to remain in the red, as most of the tickets sold during this quarter were booked before the conflict, when fares were lower.
A recovery is expected from the third quarter onward. Hana Securities anticipates that jet fuel prices will ease gradually as ceasefire talks progress, and that revenue growth will accelerate to 24% year on year as higher post-conflict ticket prices begin to flow through. Standalone operating profit is projected at 354.5bn won in the third quarter and 467.4bn won in the fourth.
For full-year 2026, standalone operating profit is forecast at 1.403tr won, an operating margin of 7.2% — a relatively modest 9% decline from the prior year.
The merger with Asiana Airlines also underpins the raised target. Korean Air is due to launch as a combined entity on 17th December 2026. At a recent investor briefing, the company flagged annual synergies of around 300bn won following the integration, to be derived from more efficient aircraft deployment and enhanced bargaining power with airports and original equipment manufacturers.
Hana Securities estimates that Asiana will contribute 416bn won in annual operating profit to the merged group by 2027. The combined carrier's operating profit is projected at 2.2tr won in 2027, with earnings per share of 3,678 won. The target price was calculated applying a price-to-earnings multiple of 11 times and a price-to-book ratio of 1.2 times.