[Click e-Stock] "CJ Logistics, Profitability Improvement Expected in Second Half... Target Price Lowered"

Target Price Lowered from 130,000 Won to 120,000 Won

On May 20, NH Investment & Securities reported that CJ Logistics saw a decline in profitability across all business divisions in the first quarter of this year and lowered its target price from 130,000 won to 120,000 won. The investment opinion of 'Buy' was maintained.

Jung Yeonseung, an analyst at NH Investment & Securities, stated, "We revised our 2025 annual operating profit estimate down by 7%, reflecting a slower pace of improvement in parcel delivery profitability and one-off profitability from new projects in W&D (warehousing & distribution). As a result, we lowered our target price by 8% compared to the previous estimate." He added, "Despite disappointing first-quarter results, we maintain a buy-on-dip perspective, as we see opportunities for profitability recovery and sales growth in the second half, including W&D, 7-day-a-week delivery, The Unban service, and expansion of the U.S. cold chain logistics business."

In the first quarter, CJ Logistics recorded sales of 2.9926 trillion won, up 2.4% year-on-year, and operating profit of 85.4 billion won, down 21.9%. Analyst Jung explained, "The company experienced an earnings shock in the first quarter due to increased costs, off-season effects, and declining profitability from new projects." He continued, "Parcel volume fell by 6.9% year-on-year, and the unit price dropped by 0.7%. The 7-day-a-week delivery service did not yield visible effects, as domestic demand was sluggish and customer attrition occurred due to price increases."

There is an outlook for recovery in market share and parcel volume in the second half of the year. Jung commented, "Although the decline is expected to continue in the second quarter, the rate of decrease in parcel volume should narrow. Considering the positive customer response to the 7-day service and the government's domestic demand stimulus policies in the second half, we anticipate a recovery in market share and a return to positive parcel volume growth." He added, "The construction division, which recorded a loss, also has a high possibility of profitability recovery in the second half, given its order backlog."