[Click eStock] CJ Daehan Tongun Crying and Laughing Amid COVID-19

Overseas Logistics Decrease but Parcel Delivery UP

[Asia Economy Reporter Minwoo Lee] An analysis suggests that the impact of the novel coronavirus infection (COVID-19) on CJ Logistics shows dual characteristics. While international logistics decreased due to countries locking down, domestic parcel delivery volume increased due to the rise in online shopping.

On the 19th, Eugene Investment & Securities analyzed CJ Logistics accordingly. They forecast consolidated sales of 2.6 trillion KRW and operating profit of 72.2 billion KRW for the first quarter of this year. Compared to the same period last year, these figures represent increases of 6.9% and 59.3%, respectively, but the operating profit fell short of the previous estimate of 82 billion KRW.

This is attributed to the impact of COVID-19 on the global and contract logistics (CL) divisions. Researcher Minjin Bang of Eugene Investment & Securities explained, "Lockin and Spidex experienced significant operational disruptions due to manufacturing production halts and logistics restrictions caused by China's strengthened quarantine measures," adding, "The current recovered operating rate is estimated to be around 80%." The CL division is inevitably affected by the reduction of bulk shipments to and from China. However, the China-related impact is expected to stabilize from next month, allowing for deferred demand.

On the other hand, the parcel delivery division benefited positively from COVID-19. Parcel volume increased by about 30% year-on-year since February due to the rise in online shopping. Researcher Bang stated, "The parcel delivery division, which normalized its margin through last year's price increases and network stabilization, is likely to experience profit leverage effects from the volume increase," and added, "Due to social distancing measures, consumers who previously did not engage in online shopping have now settled into it, acting as a structural momentum for growth in the parcel delivery market."

Eugene Investment & Securities gave CJ Logistics a 'Buy' investment rating with a target price of 210,000 KRW. The closing price the previous day was 125,500 KRW.

This content was produced with the assistance of AI translation services.