[Asia Economy Reporter Park Jihwan] Yuanta Securities evaluated on the 3rd that Poongsan stands out with a dual boost from rising copper prices and recovery in defense sales. Accordingly, the investment opinion was changed from 'Neutral' to 'Buy', and the target stock price was raised from 20,000 won to 27,000 won.
Researcher Lee Hyunsoo of Yuanta Securities stated on the 3rd, "In the phase where China's domestic economy is recovering, China's copper imports inevitably increase," adding, "This will be a factor that can drive prices up from a supply-demand perspective."
Researcher Lee Hyunsoo analyzed, "Compared to the end of March, the price change rates of major metals by the end of May are copper (+8%), nickel (+7%), zinc (+5%), aluminum (+2%), and lead (-5%)," and "Although it is a short period of two months, the price increase of copper and nickel, which have a low proportion of China's mine production, is significant."
Concerns about supply continue due to the increase in new COVID-19 cases in South American countries such as Chile and Peru, where major copper mines are located. If China undertakes economic stimulus focused on traditional infrastructure investment, copper is expected to be the biggest beneficiary.
The researcher explained, "In particular, the defense sector can recover sales from the low point in 2019," adding, "Although it may be short-term, ironically, COVID-19 has caused an increase in ammunition consumption within the United States, and the U.S. presidential election event is also a major factor in increasing ammunition demand due to uncertainty." In fact, from January to May, South Korea's ammunition exports to the U.S. amounted to 27.93 million dollars, a 1007% increase compared to the previous year.
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