[Click eStock] “LX International, Thermal Coal Prices Rise Despite Freight Rate Decline”

Hana Securities Report

[Asia Economy Reporter Minji Lee] Hana Securities maintained its buy rating and target price of 47,000 KRW for LX International on the 29th.

The third-quarter earnings are expected to show sales of 5 trillion KRW, a 26.9% increase compared to the previous year. Operating profit is projected to reach 261.4 billion KRW, a 130% increase year-on-year.

Resources are expected to show a slight improvement compared to the previous quarter. Although palm oil prices declined and Indonesian low-calorie coal prices weakened compared to the previous quarter, Australian high-calorie coal prices showed a sharp upward trend.

Yoo Jae-sun, a researcher at Hana Securities, said, "The price of Australian high-calorie coal, which replaces Russian high-calorie coal, has maintained a strong trend for a considerable period," adding, "Indonesian low-calorie coal, which showed a correction in the third quarter, is rebounding again, so the earnings growth centered on the resource sector is expected to continue through the fourth quarter." The increase in production at the Indonesian GAM mine is scheduled until the fourth quarter, which is expected to drive company-wide earnings growth until the end of the year.

In the logistics sector, although freight rates have recently fallen rapidly, some recovery is expected due to the rise in exchange rates and raw material prices.

The trading and new growth sectors are expected to show stable profit trends due to a weak exchange rate and favorable coal trading market conditions. Equity method income is expected to decrease compared to the previous quarter due to temporary production suspension following the Chinese coal mine expansion plan.

Researcher Yoo Jae-sun said, "Although a decline in Pantos' performance due to falling logistics freight rates is inevitable, the overall company earnings estimates are still likely to be revised upward," and added, "There is sufficient room for dividends to be estimated above expectations depending on the price of thermal coal."