Hyundai Glovis, the Hidden Beneficiary Stock of the Logistics Crisis?

[Asia Economy Reporter Hwang Junho] Korea Investment & Securities maintains a buy rating on Hyundai Glovis, calling it a hidden beneficiary amid the logistics crisis, and sets a target price of 260,000 KRW.

First, the operating profit for the second quarter is expected to exceed market expectations. As demand in the upstream industries improves, the benefits from rising freight rates are now beginning to materialize. Sales are estimated to be 5.1 trillion KRW, similar to the first quarter, with operating profit increasing by 24% to 255.9 billion KRW. Compared to last year, this represents a surge of 55% and 96%, respectively, thanks to the base effect.

So far, the rise in container shipping and air cargo freight rates has been a factor increasing cost burdens. Hyundai Glovis, as a comprehensive logistics company, has a different profit structure from general shipping or airline companies and could not immediately reflect spot freight rates. However, with nearly a year of supply shortages in ships and cargo planes, from the second quarter Hyundai Glovis’s performance has also reflected benefits from the strong logistics market. Additionally, the rebound in the KRW-USD exchange rate has contributed to improved profitability in CKD and overseas logistics.

The logistics crisis caused by shortages of ships and aircraft is expected to prolong due to the resurgence of COVID-19. In particular, the finished car market has faced significant production schedule disruptions due to semiconductor shortages. As a result, the value of stable logistics services has increased further. Hyundai Motor Group’s performance remained solid in the second quarter, and with volumes expected to improve significantly from the second half, Hyundai Glovis’s profitability is also expected to continue improving.

Choi Go-woon, a researcher at Korea Investment & Securities, said, "Despite sharp increases in both shipping and air freight rates, Hyundai Glovis’s stock price has remained at the level seen at the beginning of the year," adding, "Meanwhile, HMM and Korean Air have overtaken it in market capitalization. Now, Hyundai Glovis, which has the lowest valuation burden within the transportation sector, has joined the beneficiaries of the logistics crisis, making it a recommended investment opportunity."

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