[Asia Economy Reporter Park Jihwan] Yuanta Securities maintained a 'Buy' rating on Korea Zinc on the 24th, stating that as the stock price momentum weakens, downside rigidity in the stock price is expected. However, the target price was lowered by 9.43% from the previous 530,000 KRW to 480,000 KRW.
Korea Zinc's standalone operating profit for the third quarter is expected to be 182.7 billion KRW, similar to the previous year, while consolidated operating profit is forecasted to decrease by 9% year-on-year to 190.2 billion KRW.
Researcher Lee Hyunsoo stated, "Although demand improved compared to the previous quarter due to increased operating rates in downstream industries such as steel, difficulties were experienced in securing raw materials, specifically concentrates. It is estimated that the decrease in second-quarter shipments from concentrate-exporting countries impacted domestic imports in the third quarter."
Since September, the dollar index has rebounded, and under the outlook that further declines in real interest rates will be limited, the momentum for additional increases in precious metal prices has also weakened.
Lee explained, "Despite the recent strength of the dollar, the Korean won has also strengthened, which is becoming a burden. The spot TC for Chinese zinc and lead concentrates, which rebounded in July and August, has started to decline again since September, imposing cost pressures on smelting companies."
He added, "However, as proven by the first half performance, this is a company capable of generating solid results despite deteriorating external conditions, and based on abundant cash assets, the dividend per share (DPS) has been raised over the past three years."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
