[Click eStock] "CJ Daehan Tongun, Shift to Profitability-Focused Business Structure"

Consensus-Aligned Q3 Earnings This Year
Daishin Securities Maintains CJ Daehantoon Target Price at 210,000 Won

[Asia Economy Reporter Gong Byung-sun] CJ Logistics posted third-quarter results this year that met market consensus. The positive impact is attributed to the company’s shift toward a profitability-focused business structure, including actively raising parcel delivery prices.

According to Daishin Securities on the 9th, CJ Logistics’ third-quarter revenue increased by 2.6% year-on-year to 2.8465 trillion KRW, and operating profit rose by 13.8% to 105.3 billion KRW. These figures exceeded consensus estimates by 0.23% and 2.52%, respectively, generally aligning with expectations.

The increase in parcel delivery prices is analyzed to have positively influenced the results. The parcel delivery unit price in the third quarter was 2,078 KRW, up 11.5% from the same period last year. Although parcel volume only grew by 1.9% year-on-year to 431 million boxes, the shift to a profitability-centered business structure is judged to have brought positive outcomes.

(Provided by Daishin Securities)

In fact, reflecting the effect of the price increase, the quarterly operating profit margin reached its highest level in five years. The operating profit margin in the third quarter improved by 0.4 percentage points from the previous quarter to 3.7%. The operating profit margin of the parcel delivery division was 7.0%.

Yang Ji-hwan, a researcher at Daishin Securities, explained, “CJ Logistics’ proactive investments, high automation ratio, and price increases will stand out as differentiated competitive advantages next year when parcel delivery workers are excluded from sorting personnel.” He added, “The decision to withdraw from overseas parcel delivery businesses in Thailand and Malaysia was somewhat delayed but ultimately a good decision.” CJ Logistics is expected to improve annual profits by about 30 billion KRW and alleviate concerns about additional production capacity through the withdrawal from overseas parcel delivery operations.

New investments related to last-mile delivery (LMD) are judged not to be a concern yet. LMD refers to the entire distribution process including the final delivery of products to consumers, which distribution companies are focusing on to differentiate their services. New LMD investments will have a short lead time (the period from product order to receipt) until contribution profit is generated and will proceed according to customer demand.

Accordingly, Daishin Securities maintained its “Buy” rating and target price of 210,000 KRW for CJ Logistics. The closing price on the previous day was 143,500 KRW.

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