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Weak earnings, but a rebound remains possible

4Q25 review: Earnings miss on weak market conditions and one-off losses

For 4Q25, LX International reported operating profit of W55.5bn (vs. W64.8bn in 3Q25 and W94.2bn in 4Q24; below the consensus of W62.2bn). LX Glas failed to rebound, posting an operating loss of W7.6bn, while Poseung Green Power also remained in the red with a loss of W6.8bn. As a result, trading operating profit fell to W14.4bn (vs. W27.6bn in 4Q24).

Logistics operating profit declined to W33.1bn (vs. W50.9bn in 4Q24) due to persistently weak container market conditions. Resources operating profit was tepid at W8bn, as lower Indonesian coal prices and one-off losses of W7bn at the GAM mine drove a W1.3bn loss for the minerals business.

LX International recorded a net loss of W53.4bn. In addition to weak operating profit, non-operating profit deteriorated sharply due to an impairment loss of W89bn at LX Glas and the revaluation of other minority equity investments.

Earnings rebound expected in 2026 on market stabilization and base effects

The dissipation of one-off factors and gradual market stabilization should support a recovery in earnings going forward. In the resources division, the absence of one-off costs (e.g. mine maintenance expenses recognized in 4Q25), along with a rebound in Indonesian coal prices (to the high-US$40 range), should drive earnings improvement. In logistics, we expect volumes to recover after the end of the seasonal lull, while freight rate adjustments should stabilize amid supply control by shipping lines. We also expect profit contribution from the contract logistics business to expand, supported by strategic customer volumes. Trading earnings should likewise rebound as losses at Poseung Green Power and LX Glas narrow following the removal of one-off factors.

Raise TP to W38,000; maintain Hold

We raise our target price for LX International to W38,000 (from W30,000), as we revised up our target EV/EBITDA to 4x (from 3x) to reflect share price gains among peers and changed the valuation base year. With limited share upside, we maintain our Hold rating. Despite weak earnings, it is positive that the company maintained its 2025 DPS at W2,000, in line with the prior year. From a long-term perspective, valuation is low at a P/B of 0.5x; however, to outperform the market, we believe LX International needs clearer momentum from improving market conditions alongside new mine development and overseas asset acquisition opportunities.