[Click eStock] "CJ Daehan Tongun, Positive Change in Profitability-Focused Business Structure"

[Asia Economy Reporter Minji Lee] Daishin Securities maintained its buy rating and target price of 210,000 KRW for CJ Logistics on the 9th, stating that the company delivered third-quarter results in line with market expectations.

Looking at the third-quarter performance, sales reached 2.8465 trillion KRW, and operating profit was 105.3 billion KRW, up 2.6% and 13.8% respectively compared to the same period last year. By business segment, courier sales amounted to 895.8 billion KRW, and operating profit was 63.4 billion KRW, increasing 13.6% and 108% year-on-year respectively. The CL segment recorded sales of 664 billion KRW, a 0.5% increase from the same period last year, while operating profit decreased by 10.5% to 28.3 billion KRW. The global segment posted sales of 1.1231 trillion KRW and operating profit of 9.7 billion KRW, down 4.4% and 55.5% year-on-year respectively.

Reflecting the positive impact of the third-quarter courier price increase, the operating profit margin reached 3.7%, the highest in five years. The courier business segment achieved an operating profit margin of 7%. The courier unit price was 2,078 KRW, up 11.5% year-on-year, and the courier volume grew 1.9% to 431 million parcels during the same period.

Yang Ji-hwan, a researcher at Daishin Securities, said, “Although the growth rate of courier handling volume was lower than expected due to aggressive price increases, the shift to a profitability-focused business structure was rather positive,” adding, “Proactive investments, a high automation ratio, and price increases could stand out as differentiated competitive advantages next year when courier workers are excluded from sorting personnel.”

He also analyzed that the decision to withdraw from overseas courier markets such as Thailand and Malaysia is positive, as it could improve annual profits by about 30 billion KRW and alleviate concerns about additional CAPEX. Yang further added, “Investments related to the new LMD (Last-mile Delivery) are not considered a major concern because the lead time until contribution profit occurs is short and they will be carried out according to customer demand.”

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