[Click eStock] "Taewoong Logics, Increase in Maritime Transport Volume... Continued Solid Performance"

[Asia Economy Reporter Park Jihwan] IBK Investment & Securities stated on the 3rd that Taewoong Logics is expected to continue solid performance growth due to an increase in stable maritime transportation volumes of petrochemical products. Taewoong Logics is a third-party logistics company that has grown through maritime transportation of petrochemical products. It has independently operated its logistics business without a parent company, with major clients including Lotte Chemical and Kumho Petrochemical.

Minhee Lee, a researcher at IBK Investment & Securities, explained on the 3rd, "Regardless of the market price conditions of petrochemical products, the cargo volume has been steadily increasing every year," adding, "Based on securing stable shippers and shipping capacity, which are key competitive factors, as well as freight competitiveness, the company has maintained continuous business relationships with large corporations for the past 20 years." As of last year, sales composition by business division was divided into international logistics 67%, CIS logistics 16%, project logistics 13%, and others 4%.

This year, project logistics showed sluggish performance, whereas international and CIS logistics demonstrated favorable trends, according to the researcher’s analysis. Based on consolidated results for the third quarter, the company recorded sales of 86 billion KRW and operating profit of 4.2 billion KRW.

The researcher evaluated, "Due to the impact of the novel coronavirus disease (COVID-19), project logistics sales, which had high profitability, amounted to only 19.9 billion KRW cumulatively until the third quarter, representing just 53% of last year’s sales. However, with steady growth in petrochemical cargo volumes, international logistics sales growth continued, and favorable CIS logistics sales led to solid external growth."

Recently, there is a forecast that short-term cost burdens will arise due to a sharp increase in freight rates. The Shanghai Containerized Freight Index (SCFI), a representative freight index, surged 55% since September due to expectations of economic recovery and supply shortages.

The researcher projected, "When freight rates surge, price pass-through to shippers is insufficient while cost ratios rise, which negatively affects profitability in the short term but has the effect of increasing sales. If the freight index stabilizes or gradually declines in the future, it is expected to rather enhance profitability."

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