[Special Stock] KBI Metal Doubles Operating Profit on Soaring Copper Prices... Strengthening Inflation Betting

[Asia Economy Reporter Hyungsoo Park] KBI Metal is showing strength. It appears that concerns over copper supply disruptions have influenced the stock price.

As of 9:52 AM on the 10th, KBI Metal is trading at 3,140 KRW, up 1.29% from the previous day. After rising more than 20% the day before, it continues its upward trend. Daewon Cable is also rising for the second consecutive day amid expectations of a sharp increase in copper prices.

The global copper supply chain has been put on alert as a far-left candidate is likely to win the presidential election in Peru, the world's second-largest copper producer accounting for 11% of global copper production. Disruptions in copper supply from Peru, which accounts for a significant portion of global copper production, are pointed out as a factor that could intensify inflationary pressures.

The political changes in Peru are having the greatest impact. In the Peruvian presidential election, Pedro Castillo, the Marxist-leaning party leader, is leading his opponent by a narrow margin of 0.6 percentage points. The final results will be announced next week. Although the final results have not yet been released, the remaining vote-counting areas are known to favor Castillo, making the election of a far-left president highly likely.

Seonggeun Kim, a researcher at Korea Investment & Securities, explained, “From the stock market perspective, this could act as a factor strengthening inflation bets.”

Automotive electronic parts manufacturer KBI Metal saw a sharp increase in operating profit in the first quarter of this year. The rise in copper prices had an impact. KBI Metal recorded an operating profit of 4.5 billion KRW on a consolidated basis in the first quarter of this year, a 114% increase compared to the first quarter of last year.

KBI Metal explained that operating profit was maximized when global copper prices rose. KBI Metal plans to continuously expand its electronic components business. The expansion of the electronic components business is expected to align with the eco-friendly vehicle trend and help increase the average selling price. If the trend of recovering performance, which was contracted due to the COVID-19 impact, continues, a turnaround to profitability in the electronic components business is also expected.