Dividend of 14,000 KRW per Common Share
New Business Also Raises Growth Expectations
Institutions Net Bought 174.2 Billion KRW Since Last Month
[Asia Economy Reporter Eunmo Koo] Korea Zinc, a non-ferrous metal smelting company, is attracting the attention of institutional investors with its high dividends. Expectations for new businesses linked to existing operations are also emerging as an investment attraction.
According to the Korea Exchange on the 6th, Korea Zinc closed at 418,500 KRW, up 1.21% (5,000 KRW) from the previous trading day. Since last month until the previous day, it achieved a return of 10.1%. The rise in stock price was led by institutional investors. Institutions have been net buyers of Korea Zinc shares for 21 consecutive days from the 6th of last month until the previous day, purchasing a total of 174.2 billion KRW worth of shares since last month. During this period, the only stock that institutions bought more than Korea Zinc in the KOSPI market was SK Hynix.
The enhancement of the attractiveness as a high-dividend stock through dividend expansion seems to have caught the eyes of institutions. On the 2nd, Korea Zinc decided on a cash dividend of 14,000 KRW per common share as a year-end dividend. This is a high dividend with a total dividend amount of about 350 billion KRW and a dividend yield of 3.26%. Korea Zinc has been increasing its dividend per share for six consecutive years since 2013, solidifying its position as a high-dividend stock. Korea Zinc plans to maintain a dividend payout ratio of over 30% based on separate year-end results for the 2020-2021 fiscal years, provided there is no sudden uncertainty in the business environment.
Expectations for new businesses are also reflected in the stock price. Korea Zinc is known to plan the production and sale of copper foil for electric vehicles. Copper foil is a key material for secondary batteries with expected increasing demand, and Korea Zinc already operates the essential electrolysis process for copper foil manufacturing in its existing zinc smelting process.
In the long term, it is expected to enter the electric vehicle waste battery recycling business. Researcher Misong Kim of Cape Investment & Securities evaluated, "Although the electric vehicle waste battery recycling industry faces preliminary tasks such as government legislative improvements, it is very likely that smelters will dominate the market due to its similarity to existing smelting businesses, indicating very high growth potential."
Despite the COVID-19 pandemic, export performance until February remains favorable. Researcher Haneul Jung of Korea Investment & Securities said, "Although prices of metals such as zinc and lead continue to decline, exports in February did not significantly decrease due to COVID-19, so exports of zinc, lead, gold, and silver in the first quarter are not a cause for concern."
According to financial information provider FnGuide, Korea Zinc's operating profit for the first quarter of this year is estimated to increase by 16.9% compared to the same period last year to 176.9 billion KRW. Sales are also expected to increase by 6.29% to 1.7418 trillion KRW.
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