[Click eStock] "CJ Daehan Tongun, Biggest Beneficiary if Post Office Parcel Service Shrinks"

Daishin Securities Report

[Asia Economy Reporter Minji Lee] Daishin Securities maintained a buy rating and a target price of 250,000 KRW for CJ Logistics on the 17th.

Recently, CJ Logistics' stock price has shown a sluggish trend despite the parcel delivery price increase on April 1st. The reason for the stock price weakness is interpreted as a decline in the transportation sector's weighting due to the market capitalization increase of HMM and Korean Air, and a lack of market confidence in the effect of the price increase.

Second-quarter earnings are expected to increase by 3% and 28.9% year-on-year to 2.923 trillion KRW in sales and 108.2 billion KRW in operating profit, respectively. Parcel volume is projected to be about 453.6 million, and the unit price 1,999 KRW, up 87.2% and 8.5% from a year ago. Earnings are expected to show a stronger improvement trend in the second half of the year.

Yang Ji-hwan, a researcher at Daishin Securities, said, "There is strong demand for additional automation facilities and additional sorting personnel from competitors, so there is a possibility of further price increases," adding, "If the Korea Post discontinues its private parcel delivery business, CJ Logistics will be the biggest beneficiary."

Yesterday, Korea Post decided to convert its parcel delivery business into a parcel service and is reportedly planning to prepare a roadmap for this by the second half of this year. Researcher Yang analyzed, "It is highly likely that about 150 million boxes, which account for about 60% of Korea Post's total volume, will be transferred to CJ Logistics and other competitors," and "CJ Logistics, which has advantages in production volume, market share, and unit price, is likely to absorb a significant portion." Based on last year, Korea Post's parcel handling volume was about 250 million, and if 50% of the 150 million boxes, which is 60%, are transferred to CJ Logistics, sales are estimated to increase by about 160 billion KRW.