[Click eStock] "CJ Daehan Tongun, Profitability Improving Across All Divisions... Target Price Up"
Target Price Raised by 15% Compared to Previous Estimate
NH Investment & Securities on the 14th raised the target price for CJ Logistics from 145,000 KRW to 167,000 KRW, expecting profitability improvements across all business divisions. The investment rating was maintained as 'Buy.'
Researcher Jeong Yeonseung of NH Investment & Securities explained, "The target price adjustment reflects an 8% and 2% upward revision in earnings per share (EPS) for 2024 and 2025 respectively compared to previous estimates, along with a slight decrease in capital costs, leading to a 1.0% increase in the target price-to-book ratio (PBR). Profitability improvements are expected across all business divisions throughout this year."
CJ Logistics' fourth-quarter results last year exceeded market expectations. Fourth-quarter revenue was 3.0606 trillion KRW, up 1.2% year-on-year, and operating profit increased by 28.2% to 144 billion KRW. Researcher Jeong analyzed, "Parcel delivery volume in Q4 decreased by 0.1% compared to the previous year but was similar to prior estimates, and parcel delivery unit prices rose by 4.2%. The contract logistics division showed continued profit improvement excluding about 10 billion KRW of one-time costs."
He expressed the view that profitability improvements are occurring through cost efficiency and advanced automation technology across all business divisions. Researcher Jeong stated, "There is increasing potential for parcel delivery unit price hikes through recent service enhancements, indicating additional room for performance improvement. In particular, the productivity gains from advanced automation technology are not a one-time issue, so the structural profit resilience is strengthening."
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Profit levels are expected to rise in the second half of the year. Researcher Jeong forecasted, "CJ Logistics' parcel delivery volume is showing stronger seasonality as the influence of fashion and beauty products has increased compared to daily necessities. Since the consumption season is concentrated in the second half, CJ Logistics' profit levels are expected to increase as the year progresses."
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