[Click eStock] "LX Inter, 4Q Operating Profit Below Expectations"

[Asia Economy Reporter Hwang Yoon-joo] Heungkuk Securities analyzed on the 23rd that LX International's operating profit in the 4th quarter is expected to fall significantly short of estimates. Accordingly, they maintained a 'Buy' investment rating and lowered the target price to 54,000 KRW.

Researcher Park Jong-ryeol of Heungkuk Securities stated, "The 4th quarter sales are expected to increase by 2.9% year-on-year to 4.7 trillion KRW, while operating profit is expected to decline by 10% to 186.9 billion KRW, significantly below initial expectations."

Researcher Park explained, "The problem is that profitability is rapidly weakening across all sectors including trading, logistics, and resources," adding, "The main factors are the decline in Newcastle coal prices in trading, a sharp drop in freight indices in logistics, and production disruptions due to heavy rains in Ensham, Australia in the resources sector."

For 2023, sales are projected to increase by 1.2% year-on-year to 19.6 trillion KRW. Operating profit is expected to decrease by 6.4% to 931.4 billion KRW, indicating a relatively solid performance momentum.

Researcher Park said, "Currently, the favorable business conditions of general trading companies are driven by inflation and the weak Korean won," and explained, "Considering the ongoing strong commodity prices and weak Korean won, solid performance improvement is expected to continue until the first quarter of next year."

However, he added, "There remains a possibility that risks to operating performance may arise from a decline in trade volume due to global demand slowdown and a reversal in commodity price declines."