[Click eStock] "Pungsan to Record Solid Performance with Increased Sales of Non-Ferrous Metals"

Hana Financial Investment Report

[Asia Economy Reporter Minji Lee] Hana Financial Investment maintained a buy rating and a target price of 48,000 KRW for Poongsan on the 12th. This is based on the expectation of favorable operating performance this year due to the expansion of copper alloy sales.

In the fourth quarter of last year, Poongsan's sales are expected to reach 1.02 trillion KRW and operating profit 72.8 billion KRW, representing increases of 27.5% and 36.1% respectively compared to the same period last year. Total defense sales, supported by strong exports, recorded 283.1 billion KRW, up 5% year-on-year, while copper alloy sales decreased by 2.2% to 48,000 tons. Reflecting the effect of rising LME copper prices, operating profit is predicted to meet market expectations at 73.8 billion KRW.

The LME copper price fell to the low 9,000 USD per ton range in early October but rose to 10,000 USD per ton by mid-November due to recovery in Chinese economic indicators and expectations for the passage of a large-scale infrastructure bill in the U.S. Currently, it is recorded at the mid-9,000 USD per ton level.

According to the International Copper Study Group, as the second half of the year progresses, global copper concentrate production is expected to increase from 2.1% last year to 3.9% this year due to the slowdown in COVID-19 spread and new projects. At the same time, refined copper supply is also predicted to expand from 1.7% last year to 3.9% this year. Seongbong Park, a researcher at Hana Financial Investment, said, “Due to the global economic recovery, refined copper demand will shift from stagnation last year to a 2.5% increase this year,” adding, “The sharp decline in copper prices will be limited.”

Researcher Park also stated, “Infrastructure investment recovery is expected due to early fiscal spending and expansionary monetary policy by the Chinese government,” and “Poongsan’s copper alloy sales expansion is expected mainly through exports, and currently, Poongsan’s price-to-book ratio (PBR) is at about 0.53 times, indicating undervaluation attractiveness.”