Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Douglas Research Advisory

Equity Bottom-Up

<ul>
<li>Nearly four years have passed since Korean Air first proposed a merger with Asiana Airlines in November 2020. Despite repeated delays, it appears that this merger could finally occur.</li>
<li>There is now a higher probability of Korean Air and Asiana Airlines receiving the final merger approval from the United States Department of Justice. </li>
<li>Combined with attractive valuations, better balance sheet, and improved profitability from the merged entity, we believe that Korean Air shares could continue to outperform KOSPI in the next 12 months. </li>
</ul>


Nearly four years have passed since Korean Air first proposed a merger with Asiana Airlines in November 2020. Despite repeated delays, it appears that this merger could finally occur.
There is now a higher probability of Korean Air and Asiana Airlines receiving the final merger approval from the United States Department of Justice. 
Combined with attractive valuations, better balance sheet, and improved profitability from the merged entity, we believe that Korean Air shares could continue to outperform KOSPI in the next 12 months. 


Korean Air Spearheading the Korean Airline Industry Consolidation

Founder & Managing Director, AIR Control Tower, AIR Control Tower

Neil Glynn

Founder & Managing Director, AIR Control Tower

AIR Control Tower

AIR Control Tower is an independent research and analysis platform. Its mission is to provide impactful insight and analysis across the global airline industry at a company and market level via detailed financial models to aid decision making for key stake holders at a time when risks have seldom, if ever, been higher and the global sector grapples with the imperative of funding de-carbonisation. Unique analysis forecasting global carrier-level earnings/cash flows, and restructuring/de-leveraging prospects, is designed to dynamically assess the health of the industry, predict surprises and identify potential requirements for third party support.

Insights on the global airline industry

<ul>
<li>We publish a detailed update on the APAC airline sector, featuring ANA, Cathay Pacific, JAL, Korean Air, Qantas and Singapore Airlines, addressing cargo yield normalisation, and unit cost inflation.</li>
<li>We see 24% upside to consensus EBITDAR for JAL in FY24 to March 2024, and 24% downside risk at Singapore Airlines based on our detailed analysis and quarterly earnings bridges.</li>
<li>We expect earnings at most carriers to decline in calendar 2024 versus 2023 as the combination of cargo yield normalisation, fuel price pressure, and further capacity restoration prompt margin declines.</li>
</ul>


We publish a detailed update on the APAC airline sector, featuring ANA, Cathay Pacific, JAL, Korean Air, Qantas and Singapore Airlines, addressing cargo yield normalisation, and unit cost inflation.
We see 24% upside to consensus EBITDAR for JAL in FY24 to March 2024, and 24% downside risk at Singapore Airlines based on our detailed analysis and quarterly earnings bridges.
We expect earnings at most carriers to decline in calendar 2024 versus 2023 as the combination of cargo yield normalisation, fuel price pressure, and further capacity restoration prompt margin declines.


APAC Airline Sector – Cost Inflation Management Differentials Crucial as Cargo Yields Normalise

Asian Equities Analyst, Logistics & Transport, Tracking Traffic

Daniel Hellberg

Asian Equities Analyst, Logistics & Transport

Tracking Traffic

Focusing on Asian logistics, transportation, and travel companies

<ul>
<li>Several US customs brokers have been suspended under new, tighter rules</li>
<li>The new rules could make 'de minimis' imports slightly more difficult</li>
<li>Whether it lists in London or NYC, additional rule changes could threaten SHEIN</li>
</ul>


Several US customs brokers have been suspended under new, tighter rules
The new rules could make 'de minimis' imports slightly more difficult
Whether it lists in London or NYC, additional rule changes could threaten SHEIN


SHEIN: Several US Customs Broker Suspensions Tied to Tighter 'de Minimis' Rules

Global Mobility/Transport, Equity Long-Short

Mohshin Aziz

Thematic (Sector/Industry)

<ul>
<li>In aggregate, traffic among the Big-3 Chinese airlines was up 67% YoY in February and +18% vs 2019. Incontestable proof that China has regained its air travel mojo. </li>
<li>Published March schedules show total implied capacity is 31% higher YoY and 9% higher than 2019 levels. This is driven by domestic travel, international remains depressed. </li>
<li>Driven by domestic travel, international remains depressed. POSITIVE for China Eastern and other North Asian carriers that provide the missing North America link. </li>
</ul>


In aggregate, traffic among the Big-3 Chinese airlines was up 67% YoY in February and +18% vs 2019. Incontestable proof that China has regained its air travel mojo. 
Published March schedules show total implied capacity is 31% higher YoY and 9% higher than 2019 levels. This is driven by domestic travel, international remains depressed. 
Driven by domestic travel, international remains depressed. POSITIVE for China Eastern and other North Asian carriers that provide the missing North America link. 


China BIG-3 Mainland Airlines Traffic 18% Higher than 2019!

<ul>
<li>China's outbound tourism recovery started much later than others in the region</li>
<li>In particular, Taiwan &amp; Korea began ramping outbound travel earlier (in Q222)</li>
<li>As destinations, Thailand &amp; Vietnam recovered early, but now lag HK's growth</li>
</ul>


China's outbound tourism recovery started much later than others in the region
In particular, Taiwan &amp; Korea began ramping outbound travel earlier (in Q222)
As destinations, Thailand &amp; Vietnam recovered early, but now lag HK's growth


China's Tourism Recovery Versus Other Major Tourist Sources in Asia: Delayed, Not Slower

South Korea

Korean Air Lines Co., Ltd. operates air transportation services.  The Company's services include passenger and cargo transportation, aircraft maintenance, and air catering.  Korean Air Lines provides domestic and international airline services.

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Korean Air Lines (003490 KS)

Korean Air Spearheading the Korean Airline Industry Consolidation

Nearly four years have passed since Korean Air first proposed a merger with Asiana Airlines in November 2020. Despite repeated delays, it appears...

Douglas Kim

APAC Airline Sector – Cost Inflation Management Differentials Crucial as Cargo Yields Normalise

Deep dive on earnings prospects of the top tier ex-China APAC full service carriers illustrates marked differences in inflation management, and...

Neil Glynn

SHEIN: Several US Customs Broker Suspensions Tied to Tighter 'de Minimis' Rules

US Customs and Border Protection has tightened the rules under which SHEIN and Temu import cheap goods into the US. As a result, six US customs...

Tracking Traffic

China BIG-3 Mainland Airlines Traffic 18% Higher than 2019!

Chinese airlines see significant increase in traffic, with domestic travel driving growth while international remains depressed. China's air...

Mohshin Aziz

China's Tourism Recovery Versus Other Major Tourist Sources in Asia: Delayed, Not Slower

In this insight we compare China's progress toward restoring outbound tourism activity to the progress shown by other major tourist sources in the...

Tracking Traffic

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Korean Air Spearheading the Korean Airline Industry Consolidation

Nearly four years have passed since Korean Air first proposed a merger with Asiana Airlines in November 2020. Despite repeated delays, it appears...

Douglas Kim

APAC Airline Sector – Cost Inflation Management Differentials Crucial as Cargo Yields Normalise

Deep dive on earnings prospects of the top tier ex-China APAC full service carriers illustrates marked differences in inflation management, and...

Neil Glynn

SHEIN: Several US Customs Broker Suspensions Tied to Tighter 'de Minimis' Rules

US Customs and Border Protection has tightened the rules under which SHEIN and Temu import cheap goods into the US. As a result, six US customs...

Tracking Traffic

China BIG-3 Mainland Airlines Traffic 18% Higher than 2019!

​Chinese airlines see significant increase in traffic, with domestic travel driving growth while international remains depressed. China's air...

Mohshin Aziz

China's Tourism Recovery Versus Other Major Tourist Sources in Asia: Delayed, Not Slower

In this insight we compare China's progress toward restoring outbound tourism activity to the progress shown by other major tourist sources in the...

Tracking Traffic

Chinese airlines see significant increase in traffic, with domestic travel driving growth while international remains depressed. China's air...