[Click eStock] "Hyundai Glovis, Long-term Contracts + Exchange Rate Decline Outlook Positive"

[Asia Economy Reporter Hwang Yoon-joo] Heungkuk Securities evaluated Hyundai Glovis on the 31st, stating that it has a differentiated stable profit structure mainly based on long-term contracts. The investment opinion 'Buy' and the target price of 310,000 KRW were maintained.

Researcher Lee Byung-geun of Heungkuk Securities stated, "The operating profit for the third quarter increased by 51.8% year-on-year to 478.1 billion KRW, and sales increased by 29.8% to 7 trillion KRW, both exceeding consensus by 3.8% and 9.8%, respectively."

Lee explained, "Strong performance was demonstrated again due to increased volumes of finished cars and parts, continued high freight rates of PCTC, and the strong dollar. However, foreign exchange losses of 110 billion KRW occurred in ship financing, causing net profit to fall short of consensus."

By business segment, logistics sales increased by 41.2% to 2.5 trillion KRW, and operating profit rose by 14.4% to 158.2 billion KRW. Lee analyzed, "Sales growth continues mainly in the Americas due to inflation and exchange rate effects, and in the Asia-Pacific region, increased operating rates of the Indonesian plant and increased cargo volume to India are observed."

Shipping sales increased by 36.4% to 1.2 trillion KRW, and operating profit jumped 71.1% to 112.6 billion KRW. Lee diagnosed, "Margins improved due to increased maritime exports of finished cars (Q) and rising PCTC freight rates (P). Non-affiliated sales grew about 15% quarter-on-quarter as cargo volume from China, which had decreased due to lockdowns, recovered." In the bulk carrier segment, two LNG carriers that had been chartered early were returned early, reflecting approximately 10 billion KRW in compensation in the results.

Distribution sales increased by 20.3% to 3.3 trillion KRW, and operating profit rose 87.1% to 207.3 billion KRW. Lee evaluated, "The CKD division led the company's profitability improvement this quarter as well due to the strong dollar." However, orders from the Russian plant that had been delivered until February arrived in the second quarter and were recognized as sales, but there was almost no sales contribution in the third quarter.

Lee added, "The long-term transportation contract for finished cars signed in September and the increase in cargo volume will offset the decrease in CKD profits due to the expected exchange rate decline next year."

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