[Edaily Reporter Kim Hyung-il ] Shinhan Investment Securities assessed that CJ LOGISTICS(000120)is strengthening its foundation for revenue growth based on expanding its market share in the parcel delivery sector and securing new contracts in contract logistics (CL) and global operations. With a profit turnaround expected next year, the firm maintained its “Buy” rating and target price of 100,000 won.

On the 11th, Choi Min-ki, an analyst at Shinhan Investment Securities, reported that CJ LOGISTICS’s consolidated revenue for the third quarter of this year reached 3.3581 trillion won, a 9.5% increase year-over-year, while operating profit fell 25.3% to 110.5 billion won. Operating profit fell 3.5% short of the market consensus, and the operating profit margin stood at 3.3%.

In the parcel delivery segment, operating profit fell 40% to 38 billion won due to a combination of fewer business days caused by the timing difference of the Chuseok holiday and higher hub operating costs. However, the trend of expanding market share among existing parcel delivery companies continued, driven by a 9% increase in average daily parcel volume, particularly in the new parcel delivery (LMD) segment.

Operating profit in the Contract Logistics (CL) division decreased by 11% to 49.2 billion won. Despite new orders and increased volumes from existing clients, rising oil prices and handling costs put pressure on profitability. The Global division also saw its operating profit decline by 41% to 11.8 billion won. This was due to initial operating costs at new U.S. hubs, as well as delays in project logistics operations for the forwarding business caused by geopolitical instability in the Middle East.

Analyst Choi estimated that CJ LOGISTICS’ operating profit for the fourth quarter of this year would be 139.9 billion won, a 12.3% decrease compared to the same period last year. The decline in operating profit is expected to be smaller than in the third quarter, thanks to strong growth in parcel volume and the return to a normal number of business days. However, for next year, operating profit is projected to increase by 18.1% to 524.7 billion won, driven by the absorption of fixed costs resulting from rising parcel volumes and revenue from new orders secured by other business units, such as the CL and Global divisions.

Analysts suggest that if geopolitical tensions in the Middle East ease, the burden of high oil prices on the CL division and disruptions in the Global division’s forwarding operations will be resolved, potentially accelerating the pace of profit improvement. Analyst Choi stated, “The foundation for revenue growth is being strengthened through the expansion of parcel delivery market share and new orders in the CL, Global, and Construction divisions,” adding, “This is a period where investors can wait for medium-term profit improvement at current low valuation levels.”