Korea Investment & Securities has projected that CJ Logistics' operating profit for the third quarter will decrease by 22% compared to the same period last year, lowering its target stock price to 105,000 won. The investment recommendation remains a 'buy.'
Choi Woo, a researcher at Korea Investment & Securities, stated in a report that the company is still in the phase of proactive cost investment to differentiate its services. Additionally, the difference in the timing of the Chuseok holiday compared to last year has resulted in fewer business days, contributing to this baseline burden.
Choi estimated that revenue would increase by 9% year-on-year to 3.3 trillion won, marking a record high, but operating profit is expected to drop to 116 billion won, a 22% decrease. However, he noted that the consensus for operating profit has already adjusted downward, suggesting that the shortfall compared to market estimates will be limited.
He further analyzed that the parcel delivery segment is expected to see a larger decline in profit margins compared to the first half of the year due to significant cost burdens. However, excluding the difference in business days, it is estimated to have increased by nearly 9%.
In the global segment, while local operations in strategic countries like India and Vietnam continue to perform well, the expansion of geopolitical risks has significantly impacted forwarding volumes, making a decline in profits unavoidable.
Choi added that the contract logistics (CL) segment is expected to defend its profitability despite the decrease in business days and cost burdens from the war, thanks to the expansion of port and transportation (P&D) contracts.
* This article has been translated by AI.
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