[Click eStock] "Korea Zinc, Strong Operating Performance Expected in Second Half Due to Metal Price Increase"

[Asia Economy Reporter Eunmo Koo] Hana Financial Investment analyzed that Korea Zinc is expected to have favorable operating performance in the second half of the year due to rising metal prices. The investment opinion and target price were maintained at ‘Buy’ and 580,000 KRW, respectively.

Hana Financial Investment estimated that Korea Zinc’s consolidated sales for the third quarter of this year will be 1.9 trillion KRW, an increase of 11.9% compared to the same period last year, and operating profit will increase by 1.7% to 212.5 billion KRW. In a report on the 3rd, researcher Seongbong Park of Hana Financial Investment stated, “Although the zinc Spot T/C (Treatment Charge) that plummeted in the second quarter remains low at 165 USD per ton, and the decline in the KRW-USD exchange rate is expected to have a negative impact, operating profit is expected to exceed the market consensus of 202.7 billion KRW due to the rise in zinc and lead selling prices and the sharp increase in precious metal prices.” He particularly forecasted, “In the case of silver, the price surge will account for the largest sales among Korea Zinc’s products.”

Metal prices are expected to continue rising. Researcher Park said, “The LME zinc price, which rebounded in the second quarter due to the normalization of major manufacturing industries including steel in China and the resumption of operations at global automobile plants, has exceeded 2,500 USD per ton, the highest in nine months, since the end of August.” He added, “Not only China but also manufacturing indicators (PMI) in the U.S. and Europe are recovering, and a favorable real estate market and automobile sales recovery are expected, so zinc prices are likely to rise further.”

At the same time, the recent spread of COVID-19 in Bolivia is expected to be a factor driving zinc price increases due to the suspension of zinc mine operations. Additionally, researcher Park predicted, “Since the U.S. Federal Reserve (Fed) recently announced its intention to maintain low interest rates even if it tolerates inflation by adopting an average inflation targeting policy, this will act as a factor weakening interest rates and the U.S. dollar, thereby driving up precious metal prices.”

The investment opinion and target price were maintained at ‘Buy’ and 580,000 KRW, respectively. Researcher Park explained, “Favorable second-half operating performance is expected due to rising metal prices, and securing a new growth engine called battery foil in the mid-to-long term is also positive. Nevertheless, the current stock price is at the lower end of the band with a price-to-book ratio (PBR) of 1.0, so it is judged to be undervalued.”

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