Pungsan, Sindong Division Turnaround... Q3 Profitability Improvement Expected

KB Securities Report

[Asia Economy Reporter Minji Lee] Opinions have emerged that Poongsan will continue to improve profitability in the second half of the year due to improved performance in the copper division. On the 12th, KB Securities maintained a buy rating on Poongsan and kept the target price at 30,000 won.

Poongsan's third-quarter sales are expected to reach 642.3 billion won, and operating profit 34.2 billion won, representing increases of 13.9% and 17,020% respectively compared to the same period last year. Performance improvement is expected to continue following the previous quarter. On a separate basis, sales are expected to be 475.8 billion won and operating profit 27.6 billion won, up 11.6% and 342.7% year-on-year, respectively.

The copper division's sales volume was assumed to be 42,300 tons, with an average selling price of 7.69 million won per ton, a 6% increase compared to the same period last year. Seongwoo Hong, a researcher at KB Securities, said, "As the economic slowdown trend prolongs, sales volume is gradually normalizing, and an increase in average selling price is expected due to rising copper prices."

In the defense sector, sales are estimated to increase by 31% year-on-year due to strong export sales. In July this year, South Korea's ammunition exports reached 1,877 tons, a 262% increase compared to one year ago.

A turnaround in the copper division is expected in the second half of the year. This is because a gradual recovery in demand for refined copper is anticipated during the economic recovery phase. Due to China's economic recovery and the spread of COVID-19 in the Southern Hemisphere, concentrate supply has tightened, and the London Metal Exchange (LME) copper price recorded $6,711 per ton as of the previous day's closing price, a 45% increase compared to the short-term low on March 23. Researcher Hong explained, "As of last year, China accounted for 53% of refined copper demand, while South American regions such as Chile and Peru accounted for 40% of copper concentrate supply."

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