[Click eStock] "CJ Daehan Tongun, Limitations of Labor-Intensive Profit Structure" Target Price Down 20%

[Asia Economy Reporter Ji Yeon-jin] Korea Investment & Securities announced on the 18th that it is lowering the target price of CJ Logistics by 20% to 160,000 KRW, reflecting losses and uncertainties due to the strike.

Choi Go-woon, a researcher at Korea Investment & Securities, said, "CJ Logistics achieved record-high operating profits last year and is expected to continue improving performance this year by announcing a parcel delivery price increase. However, union-related uncertainties are hindering a fair valuation of the results. Although the strike ended after about 60 days, the embers of conflict still remain." He added, "As concerns about the limitations of the labor-intensive profit structure persist, the valuation recovery of the parcel delivery sector will be delayed."

This year, CJ Logistics' operating profit is expected to increase by 21% year-on-year to 416 billion KRW, supported by parcel price hikes and restructuring of overseas businesses. The first quarter is estimated at 70 billion KRW, a 30% decrease from the previous quarter due to the parcel union strike and the off-season. After the strike ended, volume is rapidly recovering, and record-high operating profits are expected to be renewed again from the second half of the year.

He said, "the key going forward is to find momentum to replace the parcel growth premium that is now difficult to maintain." He added, "CJ Logistics has begun full-scale investments in high value-added last-mile services such as fulfillment, which is a step beyond traditional parcel delivery, and financial flexibility has improved due to the restructuring of overseas businesses. Therefore, it is recommended to observe how follow-up measures regarding the strike and new growth drivers materialize until the first half of the year."

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