[Click eStock] Pungsan, Strong 1Q Earnings Expected... Copper and Defense Business Booming

On the 20th, Eugene Investment & Securities stated that Pungsan is expected to show strong first-quarter earnings. This is due to the rising copper prices and the revaluation of the defense business's value. Accordingly, they newly issued a 'Buy' investment rating with a target price of 57,000 KRW.

Researcher Yoo Jin from Eugene Investment & Securities said, "We forecast first-quarter sales of 1.0865 trillion KRW and operating profit of 70.1 billion KRW."

The researcher explained, "The rise in copper prices likely had a positive impact on inventory valuation," adding, "Copper prices increased by 12.2% compared to the previous quarter, and Metal Gain (profits generated from selling inventory purchased at lower prices at higher prices) likely occurred." The scale was estimated to be approximately 20 billion KRW.

He analyzed, "Although ammunition export volume decreased compared to last year, unit prices remained firm due to global ammunition stockpiling demand," and "the defense sector also contributed to the strong first-quarter performance."

The researcher assessed, "Since December last year, a large volume (198 tons) has been shipped to Poland, and the package exports of K2 and K9 will continue until 2025 and 2027, respectively, so positive earnings trends are expected for several years."

Meanwhile, the appropriate corporate value of Pungsan was estimated at 1.6 trillion KRW. This is the result of calculating the values of the non-ferrous metals and defense sectors at 780.4 billion KRW and 1.2323 trillion KRW, respectively.

The researcher added, "Pungsan's current stock price only reflects the value of the defense sector," and "If the economic recovery continues and the downside of copper prices is maintained, the value of the non-ferrous metals sector will also be highlighted."