[Click eStock] "Hyundai Glovis, 4Q Operating Profit Consensus Exceeds by 7%"

Reflected in Logistics Crisis Benefits... Logistics Segment Operating Profit Margin Improves by 3 Percentage Points
Korea Investment & Securities "Maintains Hyundai Glovis Target Price at 260,000 KRW"

[Asia Economy Reporter Gong Byung-sun] Hyundai Glovis's operating profit for the fourth quarter of last year is expected to exceed market consensus. Although production disruptions have occurred in upstream industries due to the shortage of automotive semiconductors and the logistics crisis, the rise in freight rates appears to have a greater impact on performance.

On the 21st, Korea Investment & Securities estimated Hyundai Glovis's fourth-quarter sales last year at 5.27 trillion KRW, an 8% increase compared to the same period last year, and operating profit at 320 billion KRW, an 82% increase over the same period. The operating profit is about 7% higher than the consensus.

This is analyzed as reflecting the benefits of the logistics crisis on performance. Last year, factors such as COVID-19 caused a logistics crisis and a shortage of automotive semiconductors. As the logistics crisis prolonged, upstream industries experienced production disruptions.

However, the benefits from the rise in freight rates seem to be greater. The finished car ocean transport (PCC) and dry bulk shipping businesses recorded record-high operating profits in the third quarter of last year, following the strong freight market. Additionally, the logistics division's operating profit margin improved by 3 percentage points year-on-year to 8%. The automotive semi-knocked down (CKD) division was expected to slow down in the fourth quarter due to the reflection of safety stock volumes until the third quarter of last year, but profitability is observed to have improved due to the effects of freight rate increases and the weak Korean won.

There are forecasts that the freight boom will peak next year, but Korea Investment & Securities considers this concern excessive. The logistics crisis has already lasted for over a year, and even if the pandemic ends, demand for stable logistics services will remain.

Choi Go-woon, a researcher at Korea Investment & Securities, explained, “Unlike pure shipping companies that make short-term freight contracts, Hyundai Glovis sets freight rates annually. Since last year's increases are reflected this year, even if the market weakens in the second half, the impact will be less.”

Accordingly, Korea Investment & Securities maintained its investment opinion of "Buy" on Hyundai Glovis and kept the target price at 260,000 KRW. The closing price on the previous day was 163,500 KRW.

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