[Click eStock] "Korea Zinc, Strong Q2 Earnings Expected Due to Metal Price Rise... Target Price Up"

Target Price Raised by 7.7% Compared to Previous Estimate

On the 4th, NH Investment & Securities raised the target price for Korea Zinc from 650,000 KRW to 700,000 KRW, anticipating that the company's second-quarter earnings this year will exceed market expectations due to rising metal prices. The investment rating was maintained as 'Buy.'

Lee Jae-kwang, a researcher at NH Investment & Securities, explained, "Reflecting the rise in metal prices and exchange rates, we have revised upward our future estimates, resulting in a 7.7% increase in the target price compared to the previous one. Despite weak demand due to ore supply shortages, the average prices of zinc and lead in the second quarter rose by 17% and 7% respectively compared to the previous quarter. Additionally, gold and silver prices increased by 13% and 24% respectively due to expectations of interest rate cuts and rising geopolitical risks."

Due to the rise in metal prices, second-quarter earnings are expected to surpass market forecasts. The researcher stated, "Korea Zinc's operating profit for the second quarter is projected to be 271 billion KRW, exceeding both previous estimates and consensus (average securities firm forecasts). The rise in prices of key products and exchange rates in the second quarter, along with the increase in prices of rare metals, which are estimated to have high profitability, are also expected to positively impact the second-quarter earnings." He added, "The average prices of indium, bismuth, and antimony in the second quarter rose about 30% compared to the previous quarter, and given the current trend, the average prices in the third quarter are also likely to increase."

There is an opinion that attention should be paid to the rise in silver prices in the second half of the year. The researcher said, "Considering the increased inventories of zinc and lead, the potential for further price increases seems limited, but we believe that gold and silver prices are likely to rise in the second half of the year. In particular, silver prices remain undervalued compared to gold prices, and despite increasing new demand due to factors such as the expansion of solar power production and the increase in electric vehicle adoption rates, supply increases remain limited due to aging mines and lack of investment, suggesting a high possibility of structural price increases in the future."