[Click eStock] "LX International, Expectations for New Investments and Shareholder Return Policy"

Hana Financial Investment Report

[Asia Economy Reporter Minji Lee] Hana Financial Investment maintained a buy rating and a target price of 47,000 KRW for LX International on the 23rd. Although the fourth-quarter performance is expected to have peaked, the news of new business investments and the shareholder return policy to be detailed in the future are seen as positive factors for the stock price.

Fourth-quarter sales are forecasted to improve by 32% year-on-year to 4.4 trillion KRW, and operating profit is expected to increase by 374.3% to 212.5 billion KRW. This is due to the maximized impact of price increases from favorable market conditions for thermal coal and palm oil in the logistics and energy & palm sectors, as well as increased production at the GAM mine. Yuje-seon, a researcher at Hana Financial Investment, said, “Although it is difficult to expect additional margins as freight rates have recently stabilized in logistics, a still high level of profitability is expected to be maintained,” adding, “Equity method gains are expected to improve year-on-year despite adjustments in Chinese coal prices and temporary production slowdowns.”

Looking at the price indicator trends for thermal coal, which significantly affect the energy & palm sector’s performance, a gradual recovery has been observed recently. Container ship freight rates are also stabilizing after moving away from an upward pattern. Researcher Yuje-seon analyzed, “The performance improvement trend will continue until the first half of next year, but it will be difficult for the stock price to benefit positively during the peak passing period,” adding, “However, attention should be paid to the cash value generated from record-high earnings.”

The company plans to invest in new businesses in addition to PBAT and logistics centers. Unlike last year’s one-time sale gains, net profit from operations was generated this year, making an increase in DPS possible. Since the net profit outlook for next year is also positive, the stock price is expected to show an upward trend if the dividend policy is concretized.