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Expectations outweigh concerns

3Q25 review: Strong results despite challenging conditions

For 3Q25, Hyundai Glovis posted revenue of W7.36tr (-1.5% YoY). Logistics revenue declined 3.1% YoY due to weak container market conditions, while shipping revenue edged down 0.5% YoY due to production disruptions at customers. Distribution revenue also slipped 0.8% YoY, affected by a 1.7% YoY decrease in CKD revenue stemming from overseas plant line adjustments.

Despite the revenue decline, operating profit rose 12% YoY to W524bn, broadly in line with market expectations. While profits declined in logistics (-12% YoY to W186.7bn) and distribution (-5.2% YoY to W141.8bn) due to the aforementioned market challenges, shipping operating profit surged 81% YoY to W195.5bn, driven by margin improvement resulting from an increased mix of non-affiliate volume and a reduction in high-cost shipping capacity.

Impact of port fees and tariffs to be limited

The PCTC business―a key driver of earnings improvement―had faced concerns over slowing US-bound exports from Hyundai Motor Group due to the 25% US tariff on Korean autos (raising fears of long-term market share losses and volume declines). However, such concerns are likely to ease following the US-Korea agreement to lower tariffs (reached on Oct. 29). Meanwhile, Chinese OEM volumes, which had been affected by labor strikes, are likely to rebound in 4Q25 as production normalizes.

As for the newly imposed US port fees, we estimate the direct cost impact at around W200bn annually―equivalent to around 10% of our 2025 operating profit estimate. However, we believe a portion of these costs will be passed on to customers, helping to minimize the impact on cash flow and overall earnings.

Retain Buy and TP of W210,000; uncertainties likely to subside

We maintain our Buy call and target price of W210,000 on Hyundai Glovis. Although we revised down our 2025?26 earnings forecasts to reflect the impact of US port fees, the adjustments were minor. Our target price is based on a P/E of 9.5x, the average peak multiple since 2020. Over the long term, we expect the company to achieve structural cost reductions through the retirement of high-cost vessels and the introduction of newer and larger-capacity vessels, reinforcing its cost competitiveness. In the near term, the resolution of tariff/port fee-related uncertainties will likely drive a further share price recovery.