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Improvement in fundamentals yet to be confirmed

4Q23 preview: Bottoming out

For 4Q23, we expect LX International to post operating profit of W78bn (+23% QoQ, -51% YoY), below the consensus of W102.6bn. We believe logistics operating profit fell 10% QoQ to W33.6bn due to weaker seasonality, while trading operating profit also likely remained weak, at W24bn. That said, overall operating profit likely rebounded QoQ due to the resources division (W20.4bn), supported by rising Indonesian coal prices and the absence of one-off expenses.

Cut TP to W31,000 and retain Trading Buy rating

We cut our target price for LX International to W31,000 (from W33,000), as we lowered our operating profit estimates by 7.6% for both 2023 and 2024. Our target price corresponds to a 2024F P/B of 0.4x (unchanged). In our view, a meaningful share price recovery will require increased visibility on new eco-friendly businesses and/or improvement in logistics/resource market conditions.