Reduced Uncertainty for Hyundai Glovis, Profitability Expected in Car Carrier Business [Click e-Stock]

Port Fee Postponement for One Year Following US-China Summit: A Positive Catalyst

Hyundai Glovis achieved third-quarter results that met market expectations. As uncertainties related to port fees have diminished, the company has secured momentum for a rebound in its stock price, and it is also being evaluated as having achieved long-term cost reductions in its car carrier operations.

On October 31, NH Investment & Securities maintained its target price for Hyundai Glovis at 225,000 won and its "Buy" investment rating, citing these factors. The previous day's closing price was 171,000 won.

In the third quarter of this year, Hyundai Glovis recorded sales of 7.3551 trillion won and operating profit of 524 billion won. Compared to the same period last year, sales declined by 1.5%, but operating profit increased by 11.7%. The company is assessed to have largely met market consensus.

In the logistics division, sales were 2.502 trillion won and operating profit was 186.7 billion won, representing declines of approximately 3% and 12%, respectively, compared to the same period last year. This was attributed to a decrease in global logistics sales due to falling container freight rates.

In the shipping division, sales reached 1.323 trillion won and operating profit was 195.5 billion won. While sales decreased by 1% compared to the third quarter of last year, operating profit increased by about 80%. A strike by domestic non-affiliated finished vehicle clients led to a gap in sales, but operations normalized starting in the fourth quarter.

In distribution, sales were 3.531 trillion won and operating profit was 141.8 billion won, down 1% and 5%, respectively, from the same period last year. This was due to a decrease in CKD (completely knocked down) volume resulting from adjustments at overseas plant lines.

The biggest positive factor is the reduction of uncertainties related to port fees. Since October 15, there had been uncertainty over whether port fee costs could be passed on to clients. If the company had to bear the costs itself, annual operating expenses were expected to increase by 200 billion won.

However, following the US-China summit the previous day, the mutual imposition of port fees has been postponed for one year, reducing uncertainty. Despite an increase in global car carrier supply, the company explained that rising finished vehicle shipments from China could partially absorb the supply increase.

Jung Yeonseung, a researcher at NH Investment & Securities, said, "Even if spot freight rates decline slightly, operating costs can be reduced through the redelivery of chartered vessels and a decrease in demurrage," adding, "At the current stock price, the price-to-earnings ratio (PER) based on next year's estimated earnings is 7.3 times, which is at a historical low."

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