[Click e Stocks] "Korea Zinc, Strong Q4 Earnings Expected Due to Zinc Price Increase"

[Asia Economy Reporter Song Hwajeong] NH Investment & Securities maintained a 'Buy' rating and a target price of 710,000 KRW for Korea Zinc on the 18th, expecting solid performance in the fourth quarter of last year due to rising zinc prices.

According to NH Investment & Securities, Korea Zinc's consolidated fourth-quarter results are estimated to show sales of 2.6076 trillion KRW, up 15.8% year-on-year, and operating profit of 304.9 billion KRW, up 16.5%. These figures exceed market consensus by 3.1% and 7.6%, respectively. Researcher Byun Jongman of NH Investment & Securities explained, "The zinc selling price in the fourth quarter rose 9.4% compared to the previous quarter, driving profit growth," adding, "The rise in zinc prices is expected to improve the performance of the Australian subsidiary SMC, a zinc smelter, and the domestic subsidiary Zinc Oxide Corporation, which produces zinc oxide (HZO)." The increase in the KRW-USD exchange rate (depreciation of the Korean won) is also believed to have positively impacted fourth-quarter profits.

Strong profit fundamentals and stock price growth are anticipated due to the expansion of the secondary battery materials business. Researcher Byun projected, "Assuming an average annual zinc metal price of 3,276 USD this year, up 11% from the previous year, and a benchmark treatment charge (TC) rising 25.8% to 200 USD per ton, the consolidated operating profit for 2022 is expected to increase 14.4% to 1.2736 trillion KRW, marking an all-time high."

The secondary battery materials business is expected to see the completion of a 13,000-ton production facility for electric vehicle copper foil in October, along with the concretization of businesses related to cathode precursor materials and spent battery recycling.