[Click eStock] "Pungsan, Focus on Defense Industry Growth... Expectation of Copper Price Increase"

Hana Securities evaluated on the 18th that attention should be paid to the defense growth potential of Poongsan. Additionally, it forecasted that copper prices could rise again in the fourth quarter. The investment opinion 'Buy' and the target price of 80,000 KRW were maintained.

Hana Securities projected that Poongsan's consolidated sales for the third quarter would increase by 15.1% year-on-year to 1.1 trillion KRW, and operating profit for the same period would rise by 142% to 77.2 billion KRW. The operating profit slightly exceeded market expectations.

Seongbong Park, a researcher at Hana Securities, explained, "While a decline in non-ferrous metal sales is expected due to the global economic slowdown including China, and the average copper price in the third quarter fell compared to the previous quarter, resulting in metal-related losses, defense sales are expected to increase year-on-year due to export expansion, and although lower than the second quarter, still maintain a high profit margin close to 20%."

Researcher Park anticipated that copper prices would rise again and defense sales would increase in the fourth quarter. He said, "Although copper inventory remains at a high level, inventory in China has sharply decreased in the second half of the year, and Chinese copper demand has also gradually recovered since hitting a low point in June, which is positive. Furthermore, domestic defense sales are expected to increase significantly in the fourth quarter while maintaining a high profit margin."

He added, "Considering the long-term stable growth expected in the defense sector, the current stock price is at a price-to-book ratio (PBR) of 0.8 times, and given the expected return on equity (ROE) of 13.6% this year, the valuation burden is limited."