[Click eStock] "CJ Daehan Tongun, 3Q Earnings Below Expectations"... Target Price ↓

[Asia Economy Reporter Lee Jung-yoon] Daishin Securities on the 5th adjusted its earnings forecast for CJ Logistics downward due to expectations that the company's third-quarter performance this year will fall short of estimates, and lowered the target stock price from 160,000 KRW to 130,000 KRW due to reasons such as a slowdown in growth in the parcel delivery sector. However, the buy rating was maintained.

CJ Logistics' third-quarter sales this year are expected to be 3.1 trillion KRW. Operating profit is forecasted at 106 billion KRW, approximately 13.1% below the market consensus estimate of 122 billion KRW. This is due to parcel delivery volume in the third quarter falling short of expectations, changes in accounting for performance bonus expenses, increased parcel trunk line costs, and a slowdown in growth in the global division.

By business segment, contract logistics (CL) sales are projected to increase by 1.8% year-on-year to 676 billion KRW, and parcel delivery sales are expected to rise 3.8% to 930.2 billion KRW. Global sales are estimated to increase by 18.5% to 1.3309 trillion KRW. The third-quarter parcel delivery volume is 420 million boxes, down 2.5% from the same period last year. The average parcel price is 2,214 KRW per box, which is a 6.5% increase compared to the same period last year.

Despite concerns about economic slowdown, the overall parcel delivery market is showing higher growth than expected. However, competition is intensifying with Coupang's expansion of its parcel delivery business and companies like Hanjin. Additionally, volume recovery is progressing slowly due to a volume maintenance policy focused on profitability.

Yang Ji-hwan, a researcher at Daishin Securities, said, "Even considering the weaker-than-expected performance and growth slowdown, the current stock price is at a historically low level with a price-to-book ratio (PBR) of about 0.55," adding, "A rapid normalization is expected once concerns about growth are resolved."