[Click eStock] "Hanjin Expected to Achieve Record-High Operating Profit... Investment Rating Neutral"

On August 29, Korea Investment & Securities maintained its neutral investment opinion on Hanjin, stating, "Despite the uncertain business environment, Hanjin is expected to achieve its highest-ever operating profit this year, driven by its own operational efficiency improvements."

On this day, Choi Gowoon, a researcher at Korea Investment & Securities, said, "Hanjin's operating profit for this year is expected to reach 136 billion won, a 36% increase compared to the previous year," adding, "Despite a slowdown in parcel delivery demand, sluggish domestic consumption, and a decline in forwarding (freight and transportation brokerage) revenue, the company is projected to achieve record-high operating profit thanks to its own operational efficiency."

While the combined operating profit of 11 listed logistics companies decreased by 10% year-on-year in the first half of this year, Hanjin's operating profit increased by 7%. The increase in operating profit this year was further amplified by the base effect from one-off ordinary wage-related expenses reflected in the fourth quarter of last year. By business segment, the port stevedoring division has consistently maintained annual operating profit of 80 to 90 billion won since 2021. In the parcel delivery segment, the operation of the Daejeon Mega Hub Terminal has stabilized, and the loss of Coupang volume has been offset by new orders from large domestic and international e-commerce platforms, leading to a rebound in profitability.

Choi pointed out, "Although the profit contribution is still low at 10%, the global business is growing rapidly through the expansion of its sales network in areas such as North American fulfillment (comprehensive logistics services) and global e-commerce. In the first half of the year, sales increased by 31% year-on-year, driving the company's overall growth. In particular, cargo volume at the Incheon Global Distribution Center (GDC) surged by more than 50%," he said.

He also highlighted that Hanjin is focusing on its global business as a growth engine. Choi explained, "The company is responding quickly to the structurally growing cross-border e-commerce market, including direct overseas purchases and reverse direct purchases. At the end of last year, it doubled the customs clearance capacity of the Incheon Airport GDC. At the same time, it is securing fulfillment centers in overseas locations such as North America and Europe, targeting reverse direct purchase demand in line with the K-culture and K-brand boom. On the other hand, the parcel delivery segment, which has started to show growth limitations, is focusing on enhancing profitability through service competitiveness and cost rationalization, while reducing unnecessary investments.

Additionally, Choi noted, "This year, macroeconomic uncertainty is so high that investment sentiment toward the logistics sector, which is cyclical, remains weak. The risk of labor union issues related to the Yellow Envelope Act must also be considered." He added, "The turning point is drawing closer, as cash flow is expected to improve significantly starting next year. With the price-to-book ratio (PBR) for this year expected to be only 0.2 times, there is significant potential for revaluation if earnings visibility is secured."