[Click eStock] "Hyundai Glovis, Rising Expectations for Earnings"

[Asia Economy Reporter Park Jihwan] NH Investment & Securities evaluated on the 25th that there is a growing expectation for improved performance of Hyundai Glovis. It is analyzed that the shipping business performance is expected to improve due to the indirect benefits from container logistics disruptions. In the second half of the year, performance outlooks are also being raised due to the expansion of logistics for finished vehicles and CKD (Completely Knocked Down) products.

Jeong Yeonseung, a researcher at NH Investment & Securities, stated, "The rising performance expectations are a valid factor for mid- to long-term valuation expansion," and "This year, we have raised the sales and operating profit forecasts by 3.8% and 4.5%, respectively." The upward revision of performance estimates is due to improved sales and profitability in the finished vehicle sea transportation (PCC) business within the shipping division. The recent decline in transportation volume caused by disruptions in finished vehicle production was offset by the inflow of spot cargo due to global container transport disruptions, and it is analyzed that profitability has rather improved due to high container spot freight rates.

Researcher Jeong said, "Expansion of business areas and securing mid- to long-term growth drivers are underway through hydrogen transport, vehicle battery recycling, and securing overseas logistics bases, and mid- to long-term valuation expansion through these is an opportunity factor."

There is an assessment that uncertainty factors remain due to the possibility of a group governance restructuring in the second half of the year. However, since the production expansion cycle due to strong demand for finished vehicles is expected to continue next year, Hyundai Glovis's logistics performance improvement trend is also expected to continue.

Improved profitability in the shipping business is expected to lead to strong second-quarter performance. Second-quarter sales reached 5.048 trillion KRW, a 54.4% increase year-on-year. Operating profit rose 81.6% to 237.2 billion KRW. The main cause is the profitability improvement of the shipping division due to finished vehicle sea transportation and bulk carrier profit improvement following the strong BDI index.

From the third quarter, external growth is expected to resume due to normalization of finished vehicle production and an increase in urgent cargo. Researcher Jeong said, "The profitability increase effect from the inflow of container spot cargo is expected to diminish, but overall profitability improvement is possible due to the easing of fixed cost burdens from volume increase, PCC loading volume rise, and favorable exchange rate effects." He predicted that sales growth will continue next year due to ongoing finished vehicle demand and the expansion of new car production by affiliated and non-affiliated finished vehicle companies.

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