Pungsan Leads, Bangsan Pushes, and Guri Drives... Record High Prices

Expected Sales Growth from Defense Sector Expansion Investment
Profitability Improvement in Non-Ferrous Sector Due to Copper Price Increase

Pungsan's stock price has reached an all-time high. This is the result of growing expectations for improved performance at Pungsan alongside the recent rise in copper prices. Although the stock price has surged sharply this year, market experts predict that the trend of performance improvement will continue for the time being.

According to the financial investment industry on the 30th, Pungsan's stock price has risen 70% since the beginning of this year. During the same period, the KOSPI increased by just over 1%. The foreign ownership ratio rose by 2.9 percentage points from 15% to 17.9%. The stock price even reached 68,000 KRW the day before. This marked a new record high since its listing on the Korea Exchange on July 30, 2008.

Pungsan was established in 2008 through a spin-off from Pungsan Holdings. It operates in the non-ferrous metal business and defense business. The sales proportions of the non-ferrous metal and defense sectors were 68% and 32%, respectively. Regarding copper, it uses scrap, zinc, nickel, and other materials as main raw materials and has established an integrated process system related to non-ferrous metal products, from casting → hot rolling and cold rolling → post-processing and packaging. The defense sector produces various military ammunition ranging from small to large calibers, sports ammunition, propellant and ammunition components, and precision forged products.

Researcher Baek Jae-seung of Samsung Securities explained, "At the end of last year, copper mining companies decided to reduce production, and in March, news of a production cut agreement among Chinese copper smelters was reported," adding, "China's March manufacturing Purchasing Managers' Index (PMI) and the U.S. March Institute for Supply Management (ISM) manufacturing index both exceeded expectations, raising hopes for economic recovery." He continued, "We expect a favorable trend in copper prices," adding, "The trend in copper prices will lead to improved second-quarter performance in Pungsan's non-ferrous metal business division due to the business structure."

According to the London Metal Exchange (LME), the price of 3-month copper futures traded at $10,031.50 per ton during the session on the 26th (local time). This is the first time since April 2022 that copper prices have exceeded $10,000 per ton.

Researcher Hwang Byung-jin of NH Investment & Securities said, "Copper prices may pause due to consumers' cautious stance following a short-term surge," but analyzed, "As long as the structurally inevitable 'supply shortage' outlook remains, the copper price target is maintained at $11,000 per ton."

Growth in the defense sector is also expected alongside the non-ferrous metal business division. As the Russia-Ukraine war prolongs, Pungsan is producing 155mm shells at maximum capacity. It plans to increase production capacity, expecting sales growth in the defense sector, and decided last year in the fourth quarter to expand the production capacity of 155mm shells. Researcher Lee Yoo-jin of Eugene Investment & Securities said, "They plan to double the production capacity of 155mm shells with an investment of 68 billion KRW," adding, "This will lead to a structural expansion of defense exports."

Pungsan's new defense sector projects are being carried out in line with the government's military power enhancement plans. Recently, they developed a 155mm extended-range shell and are pursuing 22 new developments. Eugene Investment & Securities estimates that Pungsan will achieve sales of 4.262 trillion KRW and an operating profit of 260 billion KRW this year.