[Click eStock] "Hyundai Glovis Signs 6.7 Trillion KRW Long-Term Transport Contract with Hyundai Motor Company... Target Price Up"

Daishin Securities raised the target price to 170,000 KRW on the 3rd, stating that Hyundai Glovis is highly likely to see an earnings upgrade after signing a long-term transportation contract worth 6.7 trillion KRW with Hyundai Motor and Kia.

Hyundai Glovis announced on the 31st of last month that it had signed a long-term contract for finished vehicle maritime transportation worth approximately 6.7 trillion KRW over five years with Hyundai Motor and Kia. Ji-hwan Yang, a researcher at Daishin Securities, evaluated, "This renewal of the long-term transportation contract is considered a groundbreaking deal that exceeds market expectations."

Researcher Yang mentioned three major positive effects of this contract, saying, "We can expect not only freight rate increases but also additional positive impacts." These include: ▲ the proportion of transportation volume from Hyundai Motor and Kia decreased from 60% to 50%, reducing dependence on internal transactions ▲ securing earnings stability through a five-year long-term transportation contract based on freight rates during the peak period of PCC ▲ laying the foundation for securing high-profit non-affiliated volume by lowering affiliate dependence.

This contract by Hyundai Glovis showed significant growth in scale compared to the contract signed in 2021. In 2021, a contract worth 1.9 trillion KRW over three years (an average of 655 billion KRW per year) was signed, but this contract averages about 1.34 trillion KRW annually, representing a 105% increase in the annual contract amount.

Researcher Yang explained, "The average annual contract size growth rate excluding exchange rate effects compared to the 2021 contract reaches about 87%." He also analyzed, "The proportion of Hyundai Motor and Kia volumes decreased from 60% to 50%, the applied exchange rate rose by 24% compared to 2021, and the contract period extended from three to five years, showing several differences from the previous contract."

He stated, "Hyundai Glovis has secured both earnings stability and growth potential through this contract," adding, "Based on transporting 100% of Hyundai Motor and Kia volumes, the annual contract size calculation suggests a much more positive impact than our expectations."