[Click eStock] "Hyundai Glovis, Target Price Maintained at 160,000 Won"

Korea Investment & Securities maintained a target price of 160,000 KRW and a buy rating for Hyundai Glovis on the 18th.

Hyundai Glovis's third-quarter earnings are expected to continue their growth trend and meet expectations. Sales are estimated to increase by 11% year-on-year to 7.1 trillion KRW, and operating profit is projected to rise by 15% to 443.5 billion KRW. Operating profit by business segment is expected to be 201 billion KRW for logistics, 92 billion KRW for shipping, and 151 billion KRW for distribution and Completely Knocked Down (CKD) products. Operating profit is forecasted to exceed consensus by 4%, as profits improve in all business units except bulk. While overall demand remains favorable, profitability normalization in the PCC segment and benefits from forwarding due to rising container ship freight rates are anticipated. The decline in the KRW-USD exchange rate is not expected to have as significant an impact on third-quarter earnings as concerns suggested, given the sharp drop since summer.

Since the Investor Day at the end of June, expectations for Hyundai Glovis's earnings improvement in 2025 have increased. In particular, the PCC group's volume contracts, which are three-year agreements, will expire by the end of this year. During this period, PCC spot freight rates have more than doubled. Since Glovis has faced difficulties due to increased chartering costs and ship shortages since last year, the new PCC contract to be applied from next year is expected to be an important profit growth driver. The PCC business is significant as an automotive logistics specialist that most clearly demonstrates Glovis's competitiveness, although PCC accounts for about 20% of total operating profit. The overseas logistics business, which contributes more than 30%, is also showing upward trends in both freight rates and profitability following the logistics disruption.

CKD inventory is expected to increase ahead of the operation of Hyundai's Georgia plant. Woojoon Choi, a researcher at Korea Investment & Securities, said, "The momentum will not end with just one PCC contract renewal." Researcher Choi maintained a buy rating and a target price of 160,000 KRW for Hyundai Glovis. He stated, "The chronic weaknesses of the transportation industry are concerns that supply competition will intensify no matter how good demand is, and a passive dividend policy insufficient to offset market volatility. Glovis does not fall into either category, so continuous revaluation is expected." He added that attention should be paid to the possibility of a sharp increase in dividends starting this year.