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Set to implement “value-up” plans in 2025

4Q24 review: In line with expectations when excluding one-offs

For 4Q24, Hyundai Glovis reported revenue of W7.29tr (+12% YoY). While domestic logistics revenue declined 5% YoY, overseas logistics revenue rose 15% YoY thanks to strong performances from overseas units (Americas and the Asia-Pacific region) along with robust forwarding volume. PCTC shipping revenue also jumped 29% YoY on increased non-affiliate volume and rate hikes. In addition, despite the absence of FX effects, CKD revenue saw double-digit growth (+12% YoY) on safety stock demand.

Operating profit was W459.8bn (+31% YoY), in line with our estimate (W451bn). Logistics operating profit sharply increased (+41% YoY to W235.3bn) on strong demand for overseas PCTC inland transportation, while shipping operating profit (+61% YoY to W96.8bn) was supported by a favorable comparison. On the other hand, trading operating profit increased only modestly (+3.3% YoY to W127.7bn) due to limited FX effects. Net profit was sluggish at W107bn (-57% YoY), hit by larger-than-expected equity-method losses (W143.1bn; including a one-off loss of W130bn at Hyundai Engineering) and other losses (W105.5bn) from FX and derivative positions.

2025 earnings to exceed guidance

On its earnings call, Hyundai Glovis guided 2025 operating profit at W1.8?1.9tr (vs. our estimate of W2.01tr), which would represent only 3?8% YoY growth. We believe the guidance is conservative, as it is based on a relatively low USD/KRW rate assumption (1,320) and assumes that PCTC capacity will remain flat YoY at 92 vessels. We also think the firm’s auto shipment volume assumption reflects a cautious outlook due to trade disputes. We estimate that an increase of 100 in the USD/KRW rate assumption would have lifted the guidance to W1.9-2tr.

Raise TP to W170,000; maintain Buy

We raise our target price on Hyundai Glovis to W170,000 (from W160,000), reflecting a change in our valuation base period and a higher multiple. Our target price is based on a P/E of 7.9x, the stock’s average multiple since 2019. Despite the conservative guidance, we expect earnings to improve meaningfully in 2025. In addition, with the company set to implement its “value-up” plans (payout ratio of 25% and target ROE of at least 15%), we see further upside to valuation.