[Click e-Stock] CJ Logistics' 3Q Results Expected to Miss Expectations... Target Price Cut

Mirae Asset Securities lowered its target price for CJ Logistics from 130,000 won to 120,000 won on October 20, saying the company’s third-quarter results are expected to fall short of market expectations due to fewer operating days and cost pressures. However, it maintained its “Buy” rating, saying profitability is expected to improve from the fourth quarter onward as the company integrates physical artificial intelligence (AI) and increases volumes.

“CJ Logistics is expected to post operating profit of KRW 110.9 billion in the third quarter, below market expectations,” said Ryu Jehyun, an analyst at Mirae Asset Securities. “In the parcel delivery division, the volume growth rate of around 4% fell short of initial expectations because of the four fewer operating days resulting from the difference in the timing of the Chuseok holiday. Additional operating costs from weekend and holiday deliveries and extended center operating hours also continue to weigh on the company.”

“However, average daily cargo volume achieved high-single-digit growth year over year, raising expectations for market share gains,” Ryu said. “The global division is expected to see lower earnings due to continued instability in the Middle East and a delay in the normalization of forwarding freight rates. Meanwhile, the contract logistics division will demonstrate resilience in protecting profits, supported by recovering demand from major business-to-business customers and physical AI.”

He added, “The effects of productivity innovation projects carried out at logistics centers and the integration of physical AI will be fully reflected from the fourth quarter. This will bring meaningful profitability improvements to the contract logistics division, while margin improvement initiatives in the global division will also pave the way for a rebound.”

“As Coupang’s cargo volume growth slows compared with the past, the company plans to continue strengthening its dominant position in the parcel delivery division and improving operating margins in the global division in 2027,” he said. “Most of the profit decline caused by the operating costs of weekend and holiday deliveries, which are currently being incurred to defend the company’s market position, will be offset by the effects of volume growth in early 2027.”

Ryu said, “The company’s stock is trading at around 0.4 times its price-to-book ratio, historically a low level. With expectations for parcel delivery market share gains through operational innovation and productivity improvements focused on contract logistics, the stock’s direction appears to have more room to rise than to fall.”

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