[Click eStock] "CJ Daehan Tongun, Benefiting from the Spread of Untact Consumption Trends"

[Asia Economy Reporter Park Jihwan] Hi Investment & Securities on the 15th presented a 'Buy' rating and a target price of 180,000 KRW for CJ Daehan Tongun, expecting benefits from the spread of the untact consumption trend due to the impact of the novel coronavirus infection (COVID-19).

Researcher Ha Junyoung of Hi Investment & Securities explained, "The first quarter performance recorded an operating profit of 58.2 billion KRW, falling short of market expectations," adding, "The decline in operating profit in the global business division due to COVID-19 was larger than expected, and due to changes in accounting standards, claim costs previously recorded as non-operating expenses were included in operating expenses."

The global business division turned to a loss with an operating profit of minus 7.4 billion KRW due to the impact of COVID-19. In the case of China, operating rates have increased since March, and normalization is expected in the second quarter; however, lockdowns continue in India, Southeast Asia, and the Middle East, so COVID-19 is expected to affect second-quarter performance as well.

The promising aspect is the expected benefit from the spread of the untact consumption trend. CJ Daehan Tongun owns a fulfillment center at the Gonjiam Hub Terminal, which has the advantage of next-day delivery if orders are placed by midnight.

Researcher Ha Junyoung explained, "Starting from the bottom in the first quarter, improvement is expected from the second quarter," and added, "With the activation of untact consumption, parcel volume continues to increase, and in the case of CJ LA (the U.S. subsidiary), most of the sales are consumer goods, so the impact of COVID-19 is understood to be less significant."

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