[Edaily Reporter Kwon Oh Seok ] SANGSANGINVESTMENT&SECURITIES announced on the 24th that it is maintaining its “Buy” rating on CJ LOGISTICS(000120)but lowering its target price from 150,000 won to 110,000 won.

SEOYON, an analyst at SANGSANGINVESTMENT&SECURITIES, stated, “While the company’s short-term earnings are expected to see a slowdown in company-wide margins due to increased investment costs, we view this as a stepping stone for revenue growth starting in the second half of the year,” adding “In fact, we are seeing robust growth in volume indicators—such as CJ LOGISTICS’s parcel volume, market share (MS), and new contract logistics (CL) orders—and expect the company to gradually realize profit leverage,” she added.
The analyst projected that second-quarter consolidated results would fall short of market consensus, with revenue of 3.1787 trillion won (up 4% year-over-year) and operating profit of 103.9 billion won (down 10%). The analyst explained, “Despite growth in parcel volume, we have made a conservative profit estimate due to investments in hub terminals, rising prices of raw materials and supplies following the war, and ongoing stabilization costs associated with new W&D (warehouse and distribution) contracts.”
By segment, the analyst projected that the parcel delivery division would post revenue of 983.4 billion won (+8%) and operating profit of 37.6 billion won (-18%). He noted, “We expect parcel volume to grow 10% year-over-year as the company expands its market share by offering differentiated services based on seven-day-a-week delivery. “Nevertheless, due to terminal investment costs aimed at expanding and stabilizing the seven-day-a-week delivery turnover rate, we project the OPM (operating profit margin) to slow by 1.2 percentage points to 3.8%,” he explained.
For CL, revenue is projected at 880.5 billion won (+6%), with operating profit at 38.5 billion won (-14%). A decline in profit is expected due to a slowdown in volumes of essential consumer goods, such as food and beverages, resulting from changes in consumer behavior, coupled with ongoing stabilization costs associated with new orders at W&D.
In addition, the Global segment is projected to post revenue of 1.0794 trillion won (-2%) and operating profit of 23.5 billion won (+14%). He added, “Earnings growth is expected due to increased forwarding performance driven by rising ocean freight rates, as well as higher volume and reduced vacancy rates resulting from securing major cold chain clients in the U.S.”