Korea Investment & Securities said on the 4th that CJ Logistics is expected to benefit as rival Coupang is shaken by internal and external negatives. It kept its investment opinion Buy and raised the target price to 135,000 won from 125,000 won. The previous trading day's closing price of CJ Logistics was 100,500 won.
Choi Go-un, an analyst at Korea Investment & Securities, said CJ Logistics' share price is actually more sensitive to Coupang than to the retail sector, so a spillover benefit is expected.
Choi said that in the process of losing its No. 1 parcel premium in the past, the competitive landscape change sparked by Coupang's Rocket Delivery had a big impact, adding that Coupang last year took the No. 1 spot in parcel volume for the first time. As a result, last year's e-commerce transaction value increased 6%, but third-party logistics parcel volume excluding Coupang rose only 2%.
Choi noted that CJ Logistics narrowed the service gap with Coupang through seven-day-a-week delivery and fresh delivery, and that Coupang faces union and regulatory risks of its own, so the company's earnings should improve.
Choi said the entry of C-commerce (China-based e-commerce) into the domestic market will be important for CJ Logistics' future earnings.
Choi said Chinese e-commerce companies are gradually moving to expand their domestic businesses, noting that in Sep., the Fair Trade Commission approved the establishment of a joint venture (JV) between Alibaba and Shinsegae Group. However, Choi analyzed that it would be realistically difficult for C-commerce companies to internalize parcel operations like Coupang.
Choi presented next year's revenue for CJ Logistics at 12.998 trillion won and operating profit at 565 billion won.