[Click eStock] "Pungsan, Copper Price Rise... Expected to Reflect in Earnings and Stock Price"

Korea Investment & Securities Report
Continued Rebound in Copper Prices Due to Resumption of Economic Activities

[Asia Economy Reporter Minji Lee] Korea Investment & Securities on the 3rd issued a buy rating and a target price of 31,000 KRW for Pungsan, based on the expectation of improved performance and stock price increase in the second half due to rising copper prices.

Pungsan's separate operating profit for the second quarter is expected to exceed market estimates at 14.2 billion KRW. This is due to anticipated performance improvement driven by increased domestic and export volumes in the defense sector. However, the non-ferrous metals division is expected to underperform compared to the previous quarter due to decreased sales volume and lower selling prices.

Jung Haneul, a researcher at Korea Investment & Securities, stated, “With the increasing likelihood of Biden, the 46th President of the United States, advocating for gun control, positive changes such as increased demand for firearms and ammunition in the U.S. are emerging.”

Consolidated operating profit is expected to turn positive at 11.2 billion KRW. This reflects the effect of improved performance on a separate basis. Considering that the average copper price in the second quarter was 5,384 USD per ton, down 4.6% from the previous quarter, losses from overseas subsidiaries such as PMX (Metallos) are inevitable. However, inventory valuation gains from the sharp rise in copper prices are expected to partially offset these losses, resulting in a milder impact than in the first quarter.

The rising trend in copper prices is positive for Pungsan’s stock price. Since the reopening of economic activities after COVID-19 and liquidity supply by major global countries, copper prices have continued to rebound. The rebound in copper prices is expected to be reflected in the third quarter’s performance.

Researcher Jung Haneul explained, “If the non-ferrous metals division’s performance improves and losses from overseas subsidiaries disappear, both performance and stock price will rise. The supply contract for small-caliber ammunition to the Middle East region, worth approximately 95.7 billion KRW and effective for one year from June this year, is also positive for the company.”

This content was produced with the assistance of AI translation services.