이 기사는 2020년 01월 13일 08시00분 thebell에 표출된 기사입니다

South Korea’s M&A market is paying attention to the price tag of Logen Logistics, which has been put up for sale by Hong Kong-based private equity firm Baring Private Equity Asia (BPEA). The sell-side reportedly wants the valuation to be at least 400 billion won.

According to M&A industry sources on January 9, BPEA expects Logen’s EBITDA has recorded around 41 billion won as of the end of 2019. When an EBITDA multiple for its peer group is applied, the enterprise value (EV) of Logen amounts to a little more than 400 billion won.

Compared to other logistics companies, Logen’s multiple of 10 times seems reasonable. CJ Logistics and Hanjin Express, the largest and second-largest logistics companies in the nation, have their multiples of 10 times. CJ Logistics’ market capitalization is about 3.35 trillion won, with net borrowing of 3.54 trillion won as of September of 2019. The EV of CJ Logistics - the sum of the company’s equity value and net debt - is around 6.89 trillion won. The company is expected to have recorded EBITDA of 690 billion won in 2019, which translates into the EBITDA multiple of 10 times.

Hanjin Express has market capitalization of around 350 billion won, net debt of around 930 billion won and EBITDA of 120 billion won. This would make the company’s EBITDA multiple of approximately 10 times as well.

However, a multiple of 10 times may be too high to apply to Logen, considering its business structure, size and market share. Unlike CJ Logistics and Hanjin Express whose business models are B2B-oriented, Logen is specialized in C2C business. Also, Logen does not have its own logistics infrastructure but makes individual contracts with delivery men. This means that any company acquiring Logen might need to invest a large amount of money at the beginning.

“It is hard to find other logistics companies which are similar in business structure to Logen. Accordingly, the valuation of Logen is likely to be set based on a subjective judgment [using discounted cash flow methods],” said an industry source.

The sell-side is expected to emphasize its increasing EBITDA and healthy financial structure. According to the sell-side, Logen’s is expected to record EBITDA of around 48 billion won in 2020 and 57 billion won in 2021. Its operating profit margin stood at 5.5 percent as of the end of 2018, which is higher than its rivals. CJ Logistics recorded operating profit margin of 1.8 percent while Hanjin Express posted 2.1 percent. Lotte Global Logistics recorded a loss over the same period.

(By reporter Kim Hye-ran)