Korea Investment & Securities Co. on the 6th recommended buying CJ Logistics, saying this year's parcel volume growth rate will be the highest since the untact consumption boom during the COVID-19 period in 2020. It maintained a Buy rating and a target price of 175,000 won. CJ Logistics' previous-day closing price was 114,200 won.
Korea Investment & Securities Co. estimated that CJ Logistics' parcel volume last month increased more than 10% from a year earlier. This trend outpaced the overall parcel market growth, including Coupang, by 5 percentage points. It was projected that this trend would continue in Feb.
Choi Go-un, an analyst at Korea Investment & Securities Co., said, "We expect this year's growth rate to be the highest since the untact consumption boom in 2020," and noted, "With weekend delivery launched and a year of service experience built up among e-commerce shippers, demand is increasing steadily."
On top of that, after a Coupang personal data leak, services for major clients such as Naver and E-MART expanded. In this situation, CJ Logistics' market share is expected to rise even faster.
This year's parcel operating profit was projected to improve 24% from a year earlier. Choi said, "In addition to top-line expansion, expense cuts are continuing through logistics optimization," and added, "CJ Logistics leads the logistics industry in artificial intelligence (AI) and automation capabilities through technology investment."
In the past, orders placed by consumers over the weekend bunched up on Monday and Tuesday, causing large day-of-week swings. But with demand dispersed by "Maeil Oneh," analysts say the inefficiency of deploying personnel has dropped sharply.
Choi explained, "We fully offset the increased expense from weekend delivery with our own productivity gains," adding, "This is completely different from the past, when price hikes were the only margin improvement strategy."
Although stock market volatility has recently increased, it was seen that the benefits from differentiated parcel services and changes in the e-commerce competitive landscape remain intact.
Choi explained, "If a Middle East-led logistics crisis is replayed, CJ Logistics is in an attractive position, as it could expect upside in the global forwarding segment."