[Click eStock] "Hanjin Q2 Earnings Below Expectations... Significant Improvement from Q3"

[Asia Economy Reporter Ji-hwan Park] Daishin Securities stated on the 6th that Hanjin is expected to report second-quarter earnings below market expectations. Meaningful earnings improvement is expected to be possible from the third quarter onward. The investment opinion 'Buy' and the target price of 58,000 KRW were maintained.

Ji-hwan Yang, a researcher at Daishin Securities, said, "This year's second-quarter earnings are expected to fall short of our estimates and market expectations," adding, "The reason for the weak second-quarter earnings is that the parcel delivery price increase rate announced on April 1 was lower than expected." Although the price increase plan was announced as of April 1, the contract renewal timing of major large customers is concentrated in the third quarter, resulting in the second-quarter price increase rate falling short of expectations.

Hanjin's second-quarter earnings recorded sales of 558.5 billion KRW, down 4.9% year-on-year, and operating profit of 25.8 billion KRW, down 10.7%. The average parcel delivery price per box in the second quarter was 2,195 KRW, up 2.5% year-on-year. The parcel volume is estimated to have increased by 6.5% to 120.8 million boxes.

Regarding the second agreement to prevent overwork of parcel delivery workers, additional delivery personnel are expected to be added sequentially from September. The company has deployed about 1,000 sorting personnel since February but plans to hire an additional approximately 3,000 sorting personnel. An additional parcel delivery price increase is expected in the fourth quarter.

Researcher Ji-hwan Yang said, "In the port stevedoring sector, negotiations are currently underway with The Alliance following the termination of the contract with 2M. The volume shortfall due to the expiration of the contract with 2M will be replaced by The Alliance's volume," and added, "Since earnings improvement is expected from the third quarter, we recommend taking the second-quarter earnings slump as a buying opportunity."

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