[Click eStock] "CJ Daehan Tongun, Focus on Whether Parcel Delivery Rates Will Rise This Year"

Shinyoung Securities Report

[Asia Economy Reporter Minji Lee] Shin Young Securities maintained a buy rating and a target price of 180,000 KRW for CJ Logistics on the 9th. With a significant increase in parcel volume in the delivery business division, profits are expected to grow if parcel rates rise.

In the fourth quarter of last year, the company recorded sales of 2.8413 trillion KRW, a 0.6% increase compared to the same period last year. Operating profit decreased by 10.4% to 90.8 billion KRW. Researcher Kyung-ah Yeom of Shin Young Securities explained, “The parcel volume in the highly anticipated delivery business division increased by 26% year-on-year, while rates fell by 1.4%. Since October, the deployment of sorting personnel has increased operating expenses, making it insufficient for the delivery business division’s margin to reflect the effect of increased parcel volume.”

CJ Logistics plans to continue its strategy to expand market share within the online commerce ecosystem through service linkage. In the first half of this year, it plans to open an additional fulfillment center equivalent to the one currently operating in Hyundai Gonjiam, and by the end of the year, one more center will be added, providing fulfillment services at three times the current scale next year. However, after upfront fixed investments, profit growth is expected to lag behind sales growth until occupancy rates rise.

This year, the most important factor is whether parcel rates will increase. From CJ Logistics, the market leader, to smaller companies, business margins are expanding due to increased parcel volume. If parcel rates rise by 3.1% and parcel volume increases by 10.7% this year, sales are expected to grow by 8.4%, and net income attributable to controlling interests by 34.7%.

Researcher Yeom stated, “Through proactive infrastructure investment and collaboration with major platform companies in the online commerce market, CJ Logistics maintains a 50% market share while keeping service rates affordable. Attention should be paid to the rapid growth in earnings per share (EPS) driven by improvements in non-operating income, rather than the slower-than-expected pace of operating profit improvement.”

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