[Click eStock] "Pungsan, Stock Undervaluation to Be Resolved with Defense Industry Growth"

Positive outlooks have emerged suggesting that Pungsan's stock undervaluation will be resolved, driven by growth in the defense sector. Despite profit volatility in the non-ferrous metal business, it is analyzed that the defense sector, which has high stability, continues to show steady growth.

Caliber 50 machine gun ammunition produced by Pungsan

On the 8th, Moonseon Choi, an analyst at Korea Investment & Securities, stated in a report, "Pungsan is expanding its production capacity thanks to increased demand for new products such as the ‘155mm Extended Range Ammunition’ and export growth," adding, "Considering that conventional weapons like ammunition and shells are not expanded without a demand base, the expansion is evidence that demand is sufficient."

Analyst Choi explained, "Pungsan's non-ferrous metal business experiences significant profit volatility and high uncertainty depending on copper prices, which acts as a factor undervaluing the stock," and "Recently, the defense sector has generated nearly 200 billion KRW in profits, substantially offsetting the uncertainties of the non-ferrous metal business."

Accordingly, he said, "With the increasing proportion of the defense sector, this year will be the first year of stock revaluation," and set the target stock price at 60,000 KRW by applying a price-to-book ratio (PBR) of 0.78 times.