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3Q25 preview: Slight earnings beat likely, driven by parcel delivery and W&D

For 3Q25, we expect CJ Logistics to post revenue of W3.07tr (+3% YoY). We forecast the contract logistics division to continue robust growth, with revenue rising 11% YoY. The parcel delivery unit (O-NE) should also see revenue grow 5.9% YoY, supported by a 4.8% YoY increase in volume along with solid momentum from new last-mile delivery solutions and e-commerce. Meanwhile, we look for a 5% YoY revenue decline in the global division due to weakness in the forwarding segment.

We estimate operating profit at W139.3bn, broadly flat YoY (-1.6% YoY) but slightly above the consensus (W134.1bn). We expect parcel delivery operating profit to come in at W56.1bn (+3.9% YoY). Of note, the stabilization of CJ Logistics’ seven-day delivery services likely boosted price competitiveness, allowing the firm to defend its market share. We also expect the contract logistics division to deliver solid operating profit of W57bn (+11% YoY), backed by strong profitability in warehousing & distribution (W&D).

2025 Investor Day takeaways: Cementing dominant position in 3PL

During its 2025 Investor Day event held on Sep. 23, the company projected that revenue from the W&D segment could expand to as much as W5tr over the long term. Underpinning this upbeat outlook is the expectation that logistics technology innovation will drive structural improvements in cost efficiency, which, in turn, should contribute to third-party logistics (3PL) market growth. CJ Logistics maintains a dominant position in the domestic 3PL market, with related revenue reaching W1.4tr in 2024 (out of a total market size of W8.4tr). Even amid slowing domestic demand, the firm has maintained strong growth momentum in this space.

The W&D segment, in particular, is in a phase where both market share and margins are expanding simultaneously. In 2024, CJ Logistics’ W&D revenue expanded 13% (vs. 2% for peers), supported by the growing shift from in-house logistics management to 3PL services. Profitability has also improved, with the contract logistics division’s ROE rising from 2.8% in 2020 to 7% in 2024. We also see potential for further margin/ROE expansion amid the shift from traditional cost-plus to performance-based contracts.

Retain Buy and TP of W120,000; parcel delivery market share to stabilize

We reiterate our Buy rating and target price of W120,000 on CJ Logistics. Concerns over the firm’s parcel delivery market share should ease as its seven-day delivery services become more firmly established. In contract logistics, major infrastructure projects (hubs/regional business centers) scheduled for 2025-26 are nearing completion, and the next phases of productivity improvement (phases 2/3) are set to begin in earnest. Once a stabilization in parcel delivery market share is evident, the long-term value of the contract logistics business could come into focus. All in all, we see potential for the stock’s undervaluation (trading at a 12-month forward P/B of 0.4x) to be resolved.