[Click e Stocks] "Hyundai Glovis, Strong Performance Benefiting from Global Logistics Crisis"

[Asia Economy Reporter Song Hwajeong] Korea Investment & Securities maintained its 'Buy' rating and target price of 260,000 KRW for Hyundai Glovis on the 14th, expecting strong third-quarter earnings this year due to the benefits from the global logistics crisis.

Korea Investment & Securities estimated Hyundai Glovis's third-quarter revenue to increase by 45% year-on-year to 5.3 trillion KRW, and operating profit to rise by 80% to 290.5 billion KRW. Choi Go-woon, a researcher at Korea Investment & Securities, explained, "Hyundai Glovis's third-quarter operating profit is expected to exceed market consensus by 14%, setting a new record high profit again following the second quarter," adding, "This is thanks to the benefits from the global logistics crisis outweighing the production disruptions in the upstream finished car industry."

The shipping and Completely Knocked Down (CKD) product segments are driving profit growth. Since the third quarter, dry bulk freight rates have surged following container shipping. Researcher Choi said, "Finished car sea transport (PCC) can transport container cargo at higher freight rates in place of reduced finished car volumes, resulting in better-than-expected profitability," and analyzed, "The bulk segment experienced the best operating environment in a decade due to a 35% increase in the average Baltic Dry Index (BDI) in the third quarter compared to the second quarter, and CKD is also expected to achieve record-high profits amid extremely tight cargo supply and rising exchange rates."

The momentum of the hydrogen new business is also noteworthy. Researcher Choi stated, "The importance of logistics is the same in eco-friendly new businesses such as hydrogen and battery leasing," and added, "Hyundai Glovis plans to actively invest in global hydrogen logistics and distribution infrastructure based on its abundant cash reserves."

There is an opinion that Hyundai Glovis's role within the group is excessively undervalued compared to its short-term strong performance and the potential of new businesses. While beneficiaries of the logistics crisis have each highlighted strong third-quarter earnings momentum, Hyundai Glovis's stock price has been neglected, falling by 19% since the second half of the year. Researcher Choi said, "Although the supply shortage in the international freight market worsened in the third quarter, Hyundai Glovis has been undervalued in terms of profit momentum compared to air cargo or shipping due to its strong image as Hyundai Motor Group's logistics company," and added, "Hyundai Glovis is the only logistics crisis beneficiary in the transportation sector whose stock price has not reflected this, so I recommend Hyundai Glovis."