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Ability to defend market share partially confirmed

2Q25 review: OP declines 8.1% YoY due to weakness in parcel delivery

For 2Q25, CJ Logistics posted revenue of W3.05tr (-0.4% YoY). The contract logistics division delivered solid top-line growth (+13.1% YoY), supported by steady order wins. However, the parcel delivery unit (O-NE) saw a 3.7% YoY decline in revenue amid a 3.8% YoY drop in volume. This, together with a 1.9% YoY decline in the global division, dragged down overall revenue.

Operating profit came in at W115.2bn, in line with the lowered consensus (W115.1bn). Parcel delivery operating profit fell 25.8% YoY to W45.8bn, as promotions targeting small/mid-sized customers pushed down ASP. Meanwhile, contract logistics operating profit held up relatively well at W44.8bn (+5.4% YoY). At the global division, despite market concerns, operating profit rose 11.9% YoY on a strong performance in Southeast Asia, partially offsetting the weakness in parcel delivery.

Stabilizing market share and strong fulfillment capabilities

While parcel delivery volume continued falling in 2Q25 (-3.8% YoY), the pace of the decline was slower than we had expected (-5.2% YoY). This suggests that the firm managed to defend its market share to some extent, likely due to its superior fulfillment capabilities relative to smaller rivals. Its promotional efforts are proving effective (despite the sluggish consumption environment), and the introduction of Sunday/holiday delivery services in June also likely had a positive impact. In 3Q25, we expect parcel delivery volume to turn around, growing 3% YoY. After a long period of volatility, we expect CJ Logistics’ parcel delivery market share to continue stabilizing throughout 2H25 as its seven-day delivery services gain increasing traction.

If the firm succeeds in stabilizing its parcel delivery market share, investor attention could shift to contract logistics earnings, given the steady growth in warehousing & distribution order volume backed by process automation. In 2H25, we expect order intake to expand sharply in the transport segment as well.

Retain Buy and TP of W120,000; key variables are treasury stock & market share

We retain our Buy rating and target price of W120,000 on CJ Logistics. Our target price is based on a 12-month forward P/E of 10x (three-year average; unchanged). While we slightly lowered our 2025 and 2026 earnings estimates to reflect 2Q25 results, we expect the pace of the earnings decline to slow in 2H25. If the firm’s treasury stock disposal plan becomes clearer and its market share continues to stabilize, the stock’s valuation discount should gradually ease.