[Click e Stocks] "LX International, Performance Sailing Smoothly"

[Asia Economy Reporter Song Hwajeong] NH Investment & Securities maintained its 'Buy' rating and target price of 39,000 KRW for LX International on the 16th, expecting continued earnings momentum driven by strong logistics business and rising resource prices.

The fourth-quarter earnings this year are expected to exceed market consensus. NH Investment & Securities estimated LX International's Q4 sales to increase by 23% year-on-year to 4.1287 trillion KRW, and operating profit to surge 348% to 200.8 billion KRW. The energy and palm oil businesses are expected to turn profitable and drive earnings growth. Dongyang Kim, a researcher at NH Investment & Securities, analyzed, "Coal prices remained strong compared to the previous quarter despite a correction after a sharp rise in early Q4, increasing profits, and palm oil prices stayed strong but sales were deferred due to increased rainfall. The logistics business will reflect a slowdown in freight rate increases and some effects of the peak season." Coal prices adjusted after a strong surge in early October but remain about three times the average price of the previous year, with a rebound expected due to winter demand. Researcher Kim said, "Operating profit from the coal business is expected to grow 12% year-on-year next year due to effects such as the increase in production at the Indonesian GAM coal mine (from 12 million tons to 15 million tons)."

NH Investment & Securities projected LX International's operating profit for this year and next year at 649.5 billion KRW and 634.5 billion KRW, respectively. This year represents a 306% increase from the previous year, but a 2% decrease is expected next year. The year-end dividend per share for 2021 is estimated at 1,600 KRW, a 300% increase from the previous year.

Strong earnings momentum from the logistics and coal businesses is expected to support synergy initiatives within the newly established holding company, strengthen eco-friendly and wellness new businesses, and enhance shareholder value. Researcher Kim stated, "We plan to invest an average of 300 billion KRW annually over the next four years in new businesses, including acquiring nickel mines, eco-friendly projects such as carbon emission rights, and expanding distribution of COVID-19 diagnostic kits, which will reduce uncertainties related to excluding investments in the coal business."