[Click eStock] "Korea Zinc to Grow in H2 with Improved Sales Environment... Target Price Up"

[Asia Economy Reporter Lee Myunghwan] Daishin Securities announced on the 7th that it maintains a buy rating on Korea Zinc and has raised the target price from 670,000 KRW to 770,000 KRW. The company also forecasted that Korea Zinc will continue its growth in the second half of this year.

Daishin Securities projected Korea Zinc's sales for the third quarter of this year to increase by 20% year-on-year to 2.8966 trillion KRW, and operating profit to rise by 14.9% to 305.5 billion KRW. The operating profit margin is expected to decrease by 0.5 percentage points from the same period last year to 10.5%.

Korea Zinc's sales volume in the first half was lower than estimates due to logistics disruptions and maintenance schedules for precious metal facilities. Daishin Securities expects sales volume to increase in the second half as the sales environment improves compared to the first half.

Daishin Securities analyzed that the ongoing global zinc supply disruptions could create a favorable sales environment for Korea Zinc. The issue of global zinc supply shortages continues due to reduced operating rates of smelters in the European region. Additionally, Russia's renewed suspension of gas supply through Nord Stream could lead to a price rebound caused by zinc supply shortages. Initially, prices of metal materials had generally declined since April, leading to expectations of weak performance for Korea Zinc in the second half.

Daishin Securities also pointed out that the recent sharp rise in the exchange rate is one of the factors supporting continued strong performance. The won-dollar exchange rate recently surpassed 1,370 KRW, which is advantageous for Korea Zinc, as 70% of its sales are export-based.

Korea Zinc is currently experiencing increased stock price volatility amid speculation about separation from the Youngpoong Group and potential shareholding competition. Regarding this, Lee Taehwan, a researcher at Daishin Securities, stated, "Stock price fluctuations due to issue flows are inevitable for the time being," but added, "Even excluding officially unconfirmed information, there is sufficient basis for buying due to performance momentum and new business investments."