[Click eStock] "CJ Logistics Entering Earnings Improvement Phase... Target Price Maintained"

[Asia Economy Reporter Myunghwan Lee] Daishin Securities announced on the 7th that it maintains a buy rating and a target price of 160,000 KRW for CJ Logistics. This is because the company is expected to deliver earnings that meet market expectations for the second quarter of this year.

Daishin Securities forecasts CJ Logistics' sales for the second quarter of this year to increase by 8.5% year-on-year to 2.9808 trillion KRW, and operating profit to rise by 25.8% to 114 billion KRW. These figures are in line with market expectations.

By segment, contract logistics sales are expected to increase by 1.5% year-on-year to 687.9 billion KRW, with gross profit rising by 14.5% to 74.3 billion KRW. Parcel delivery sales are projected to grow by 6.4% year-on-year to 921.1 billion KRW, with gross profit increasing by 9.2% to 124.4 billion KRW. The global segment is estimated to record sales of 1.2205 trillion KRW, up 15.5% year-on-year, and gross profit of 94 billion KRW, up 16.7%.

Daishin Securities analyzed that the parcel delivery segment, which was sluggish due to the strike in the first quarter, is recovering market share in the second quarter. The contract logistics segment is also seeing continued profitability improvement through price increases. The global segment is maintaining performance improvements following a turnaround in the first quarter, supported by strong air and sea freight and growth in overseas subsidiaries in the US, India, and other countries.

The volume in the parcel delivery business has been increasing year-on-year since May, according to the analysis. However, it noted that until April, the segment was in a contraction phase compared to the same period last year. CJ Logistics' parcel delivery market share recovered from a low of 43.2% in January this year to 45.4% in March and 47.0% in May. The average parcel delivery price in the second quarter is estimated at 2,144 KRW per box, up 6.7% year-on-year. The average parcel delivery prices in April and May rose by 7.6% and 5.3% respectively compared to the same months last year.

Researcher Jihwan Yang of Daishin Securities stated, "Amid growing concerns about a global economic recession, CJ Logistics, which has relatively low earnings volatility despite external variable changes, could emerge as a stable investment destination."