[Click eStock] "CJ Daehan Tongun, Expecting Upcoming Growth Rather Than Disappointment"

DS Investment & Securities forecasted on the 16th that CJ Logistics' first-quarter performance would be sluggish. However, they anticipated that parcel delivery volume would increase from the second quarter, leading to growth in earnings. The buy rating and target price of 130,000 KRW were maintained.

CJ Logistics' first-quarter sales are expected to be 2.9 trillion KRW, a 0.1% increase compared to the same period last year, while operating profit is forecasted to decline by 17.7% to 90.1 billion KRW.

Sales in the parcel delivery segment are estimated to decrease by 7.9% year-on-year to 862.8 billion KRW, with operating profit dropping 37.1% to 33.6 billion KRW. The CL segment is expected to show a solid trend with sales and operating profit growing by 5.4% and 11.5%, respectively, compared to the previous year. The global segment is anticipated to experience a decline in operating profit due to poor performance in the forwarding division.

An Juwon, a researcher at DS Investment & Securities, explained, "The decline is expected due to reduced parcel delivery volume caused by weakening domestic consumption and the impact of the seven-day-a-week delivery promotion," adding, "Although there are issues in each business division, the reduction in parcel delivery performance will ultimately have the greatest impact on the overall profit decline in the first quarter."

However, performance is expected to improve from the second quarter as parcel delivery volume recovers.

Researcher An stated, "Since January 5th this year, the seven-day-a-week delivery service has been in operation, and it appears that order volumes from domestic distribution platforms are also increasing. In the first quarter, as the service was in its initial phase, the effect was not fully reflected," adding, "From the second quarter, combined with parcel delivery fee increases, a significant rise in delivery volume can be expected."

Researcher An also predicted that opportunities would inevitably arise for CJ Logistics due to the changing domestic market environment.

He said, "The recent suspension of dawn delivery services by domestic competitors is very telling," explaining, "Both logistics and parcel delivery are businesses requiring large-scale capital investment, and only a few companies can sustain continuous investment."