[Click eStock] "ITCEN, Expected to Benefit from Gold Price Increase"

[Asia Economy Reporter Jang Hyowon] KB Securities analyzed on the 12th that ITCEN is expected to benefit as the value of the safe asset 'gold' is highlighted.

ITCEN holds a 67.2% stake in 'Korea Gold Exchange Three M' and operates a gold trading platform business. As of 2021, it distributed approximately 350,000 tons of gold.

Researcher Lim Sang-guk of KB Securities stated, "As expectations for a slowdown in interest rate hikes emerge, the strong dollar trend is calming down, leading to a continued rise in gold prices and related ETFs," adding, "Furthermore, as uncertainty over recession concerns grows, the attractiveness of gold, a representative safe asset, is expected to increase."

Gold is typically traded in dollars, and when the value of the dollar weakens, the perceived price of gold decreases, increasing gold's asset appeal. As of the 11th, the international gold (February contract) price reached $1,880 per ounce, marking the highest level in eight months since May 9 of last year. The market views the $1,800 level as an important support line for the time being.

Researcher Lim said, "Expectations for the end of China's zero-COVID policy and subsequent increase in Chinese demand are also expected to act as factors driving gold price increases," and forecasted, "The increased attractiveness of gold and rising gold prices will serve as momentum for ITCEN's stock price and earnings."

However, ITCEN recorded consolidated cumulative sales of 1.8291 trillion KRW and operating profit of 5.6 billion KRW in the third quarter of last year, representing decreases of 20% and 4.5%, respectively, compared to the same period the previous year.

Researcher Lim analyzed, "The decrease in sales is due to sluggish gold trading sales, which account for a large portion of sales," adding, "Last year, while the international gold price declined due to a strong dollar, the domestic gold price showed strength due to a sharp depreciation of the Korean won, causing a divergence between international and domestic gold prices and sluggish gold trading due to financial tightening, leading to a decrease in sales."

He continued, "On the other hand, operating profit performed relatively well compared to the decrease in sales due to the strong performance of the IT business segment," and predicted, "Considering the characteristics of the subsidiary's business, profits will normalize in the fourth quarter, and with recent gold prices reaching an eight-month high, the attractiveness of gold amid economic uncertainty will continue to increase."