Asiana Airlines, Inc. (KRX:020560): Are Analysts Optimistic?

With the business potentially at an important milestone, we thought we'd take a closer look at Asiana Airlines, Inc.'s (KRX:020560) future prospects. Asiana Airlines, Inc. provides air transportation services for passengers and cargo in South Korea and internationally. On 31 December 2020, the ₩1.1t market-cap company posted a loss of ₩379b for its most recent financial year. The most pressing concern for investors is Asiana Airlines' path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

View our latest analysis for Asiana Airlines

Consensus from 2 of the South Korean Airlines analysts is that Asiana Airlines is on the verge of breakeven. They anticipate the company to incur a final loss in 2022, before generating positive profits of ₩42b in 2023. Therefore, the company is expected to breakeven roughly 2 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2023? Working backwards from analyst estimates, it turns out that they expect the company to grow 43% year-on-year, on average, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving Asiana Airlines' growth isn’t the focus of this broad overview, though, bear in mind that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

Before we wrap up, there’s one issue worth mentioning. Asiana Airlines currently has a debt-to-equity ratio of over 2x. Typically, debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

There are key fundamentals of Asiana Airlines which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Asiana Airlines, take a look at Asiana Airlines' company page on Simply Wall St. We've also compiled a list of important aspects you should further research:

1. Valuation: What is Asiana Airlines worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Asiana Airlines is currently mispriced by the market.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Asiana Airlines’s board and the CEO’s background.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

When trading stocks or any other investment, use the platform considered by many to be the Professional's Gateway to the Worlds Market, Interactive Brokers. You get the lowest-cost* trading on stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.