[Click eStock] CJ Daehan Tongun, Growth Engine 'Sufficient' Despite Global Slowdown

1Q Operating Profit Expected at 64.4 Billion Won... Up 41.9% YoY
Overseas Business Slump Offset by Domestic Parcel Delivery
"Securing Mid-to-Long-Term Growth Engine Through Alliance with Naver"

[Asia Economy Reporter Minwoo Lee] Despite sluggish overseas business due to the novel coronavirus disease (COVID-19), CJ Logistics is expected to have already secured sufficient growth momentum. It is analyzed that COVID-19 is only a temporary impact, and steady growth has been secured through increased parcel volume and expansion of logistics management (fulfillment) business.

According to NH Investment & Securities on the 6th, CJ Logistics is estimated to achieve sales of 2.5618 trillion KRW and operating profit of 64.4 billion KRW in the first quarter of this year. This represents an increase of 5.3% and 41.9%, respectively, compared to the first quarter of last year. By segment, parcel delivery is expected to increase by 23%, contract logistics (CL) to decrease by 2%, and global logistics to decrease by 1%. The parcel volume growth rate in the first quarter is projected at 22%, with unit prices also expected to rise by 1%.

Researcher Yeonseung Jeong of NH Investment & Securities explained, "Due to COVID-19, the volume and operating days of the corporation in China decreased in the first quarter, but normalized from the second quarter. Although sales decline is inevitable due to volume slowdown in some Southeast Asian countries and the United States, improvements in parcel delivery performance are expected to offset this until the first half of the year."

Along with the increase in parcel volume, steady sales growth is expected throughout this year due to the expansion of fulfillment logistics through Naver Brand Store. Strengthening the alliance with Naver to form a competitive structure against Coupang is seen as securing sufficient mid- to long-term external growth momentum. It is also forecasted that the economies of scale from improvements in logistics automation technology will gradually increase. Researcher Jeong stated, "Since the growth of the domestic e-commerce market is not expected to be a one-time event, the impact of reduced global volume until the second quarter is considered a short-term performance risk. If the impact of COVID-19 diminishes in the second half of the year, sales growth will strengthen."

Accordingly, NH Investment & Securities maintained a 'Buy' investment rating and a target price of 190,000 KRW for CJ Logistics. The closing price on the previous trading day was 141,500 KRW.

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