[Click eStock] "Hyundai Glovis, Speed Is Disappointing but Recovery Is Clear"

"Due to the nature of the logistics industry, there is a time lag in revenue recognition... Weak performance until 3Q, full rebound from 4Q"

[Asia Economy Reporter Minwoo Lee] Hyundai Glovis is expected to rebound starting in the second half of the year. Although the business conditions of client companies have already recovered from the impact of the novel coronavirus disease (COVID-19), due to the industry's characteristic of using the logistics arrival time as the basis for performance aggregation, the recovery trend is expected to become apparent from the third quarter.

On the 27th, NH Investment & Securities maintained a 'Buy' investment opinion and a target price of 150,000 KRW for Hyundai Glovis. The previous trading day's closing price was 115,000 KRW. It is viewed that as global finished vehicle cargo volume and affiliate sales recover in the second half, performance will gradually improve.

However, there is a forecast that the recovery speed may fall short of initial expectations. Although normalization of overseas factories has begun, sales in the logistics and shipping business divisions are recognized based on progress, and in the CKD (Completely Knocked Down) business division, sales are recognized based on arrival time. In particular, it is expected to take time to consume the increased parts materials in the CKD division and to transport new parts. Therefore, a significant increase in operating profit is likely to be possible only from the fourth quarter.

For these reasons, NH Investment & Securities forecast that Hyundai Glovis will achieve sales of 3.64 trillion KRW and operating profit of 146 billion KRW in the third quarter this year. It is expected that sales will recover to the 4 trillion KRW range only starting from the fourth quarter.

Jeong Yeonseung, a researcher at NH Investment & Securities, explained, "Although there are concerns about the speed of recovery, the direction of performance recovery in the second half is clear," adding, "Valuation expansion is possible when plans for using the held cash become concrete."

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