Table of Contents
- Is the Lotte Global Logistics IPO a new investment opportunity?
- What kind of company is Lotte Global Logistics?
- IPO Details: Schedule, Offer Price, Fund Usage Plan
- Financial Condition Analysis: Growth and Stability Check
- Market Position and Competitive Environment: The Rise of Coupang and Intensifying Competition
- Future Growth Strategies and Outlook
- Should you invest in public offerings? Final Check
Is the Lotte Global Logistics IPO a new investment opportunity?
Lotte Global Logistics, the major logistics subsidiary of Lotte Group, plans to list on the securities market (KOSPI) in May 2025. This is Lotte Group's corporate listing after about four years since Lotte Rental and has garnered significant interest from investors.
Lotte Global Logistics provides various integrated logistics services, including delivery services, SCM consulting, and global logistics operations, playing a crucial role in the domestic logistics market. This upcoming listing raises questions about whether Lotte Global Logistics will gain opportunities for growth and whether investing in its public offering will be an attractive choice, necessitating an in-depth analysis.
What kind of company is Lotte Global Logistics?
Lotte Global Logistics started in 1988 as Asia Shipping Co., Ltd., transitioned through various names, and was renamed to its current name in 2016. In 2019, it merged with Lotte Logistics to grow even larger.
Its primary business areas are divided into three segments: delivery (LM), SCM (TLS), and global business (GBS).
The delivery sector utilizes a nationwide network to provide services to individual and corporate clients, expected to account for about 40% of total revenue in 2024.
The SCM segment, which encompasses services such as warehousing, inland transportation, and port operations, holds the largest revenue share at approximately 51.3%.
Finally, the global business segment, which includes marine and air forwarding, as well as international express services, accounts for about 8.7% of revenue.
The company aims to play a leading role in the future logistics market by introducing smart logistics technologies. The current CEO is Kyung Byung-koo, who has experience in global operations at CJ Logistics.
IPO Details: Schedule, Offer Price, Fund Usage Plan
Lotte Global Logistics passed the preliminary listing examination of the Korea Exchange in December 2024 and submitted its securities registration statement in March 2025, officially starting the public offering process.
The demand forecasting period is scheduled from April 24 to 30, with the public subscription taking place from May 12 to 13. The listing date is planned for May 21.
In this public offering, a total of 14,944,322 shares are expected to be issued, with new shares and existing shares each accounting for half. The anticipated offer price is set between 11,500 KRW and 13,500 KRW, which would result in an estimated market capitalization ranging from 478.9 billion KRW to 562.2 billion KRW. The total estimated public offering amount is expected to be between approximately 171.9 billion KRW to 201.7 billion KRW.
This IPO is analyzed to be closely related to the financial investor (FI) pressure for liquidity. Notably, the existing share sale ratio being as high as 50% is noteworthy.
The company is expected to raise about 84.8 billion to 100.8 billion KRW by issuing new shares, primarily using these funds for establishing delivery infrastructure and logistics automation (about 34.8 billion KRW), cold chain operations in Vietnam (about 20 billion KRW), and debt repayment (about 30 billion KRW).
These plans are expected to contribute to enhancing the company's future growth potential.
Financial Condition Analysis: Growth and Stability Check
Lotte Global Logistics recorded approximately 4 trillion KRW in revenue in 2022, but is projected to see a slight decrease in 2023 and 2024, reaching about 3.5733 trillion KRW. This is largely attributed to the end of pandemic-related boom, fierce competition, and the consolidation of certain businesses. Notably, revenue decline in the global business segment has been significant. Nevertheless, the stable captive revenue ratio from Lotte Group subsidiaries is expected to increase to 34.7% (about 1.2408 trillion KRW) in 2024.
Interestingly, despite the decrease in revenue, profitability has notably improved. The operating profit for 2024 is expected to reach 90.2 billion KRW, the highest figure since its establishment, reflecting a 41.1% increase compared to 2022. Additionally, the net income is projected to rise significantly to 40.5 billion KRW. This performance is understood as a reflection of efforts to enhance operational efficiency through continuous infrastructure investment and automation, along with improvements in cost ratios. The operating profit margin stands at 2.52%, while the net income margin has steadily improved to 1.13%.
Considering financial stability, the high debt ratio of around 341% in 2024 poses a concern. This could lead to increased interest costs and potential constraints on financial flexibility. Some of the funds raised through the IPO are intended for debt repayment, but there may be limits to fundamentally improving the financial structure.
Market Position and Competitive Environment: The Rise of Coupang and Intensifying Competition
The competitive structure of the domestic delivery market is changing. In the past, it was dominated by a triopoly of CJ Logistics, Lotte Global Logistics, and Hanjin, but Coupang's rapid rise in its self-delivery volume has led it to take the new top spot.
Coupang is currently assessed to have surpassed CJ Logistics in terms of volume shipped, while Lotte Global Logistics has essentially slipped to below third place. This situation indicates a shift in the perception that Lotte Global Logistics was 'the second in the market.'
CJ Logistics stands out with its vast scale, excellent network, and notable technology investments. Meanwhile, Hanjin focuses on expanding its delivery network and handling C-commerce volumes to pursue global business growth.
Lotte Global Logistics possesses strengths based on stable captive volumes from Lotte Group as well as recent profitability improvements. However, its low profitability compared to competitors, high debt ratio, and aggressive strategies from Coupang are cited as significant weaknesses.
Future Growth Strategies and Outlook
Lotte Global Logistics is exploring various strategies to overcome intense competition and stagnant revenue. They are focusing on developing specialized logistics services, pursuing global market expansion, and strengthening synergies within the Lotte Group.
Particularly, the company plans to enter high-value logistics sectors such as secondary batteries, hydrogen, and ammonia to create new growth opportunities. Additionally, they intend to diversify revenue sources by expanding into overseas markets in Vietnam, Eastern Europe, and North America.
Moreover, by taking charge of Lotte Shopping's 'Lotte e-Grocery' logistics, they aim to maximize cooperation within the group while continually investing in automation to enhance operational efficiency and profitability. These strategies are expected to play a crucial role in the sustainable growth of Lotte Global Logistics.
The logistics sector has several opportunities with the development of e-commerce and C-commerce, technological innovations (automation and AI), and strengthened ESG management. However, challenges such as economic recession, geopolitical risks, concerns about oversupply, and fierce competition also exist. Therefore, Lotte Global Logistics's future success will heavily depend on how effectively it can implement the proposed growth strategies in these various environments.
Should you invest in public offerings? Final Check
Lotte Global Logistics is enhancing its profitability based on stable captive volumes and has a clear strategy for discovering new growth engines, which is positive. The offer price has been significantly lowered compared to initial expectations, increasing its investment attractiveness to a degree.
However, some risk factors remain. The high debt ratio and intensified competition due to Coupang need attention. The IPO structure related to FI exit and the proportion of existing share sales should be carefully evaluated. The ongoing concerns about overvaluation despite the discounted offer price may raise alarm for investors. Notably, the success of new ventures such as secondary batteries and hydrogen holds significant uncertainty, warranting a long-term perspective.
Ultimately, investment in Lotte Global Logistics's public offering should consider whether the company's profitability will continue to improve, the potential for successful new business strategies, and how it will manage high debt levels. Investors must thoroughly analyze both the proposed growth potential and the inherent risk factors.
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