[Click eStock] "Pungsan, Strong Q3 Performance... Future Copper Prices and US Ammunition Demand Remain Robust"

[Asia Economy Reporter Oh Ju-yeon] NH Investment & Securities evaluated on the 2nd that Poongsan posted better-than-expected operating profit in the third quarter of this year, delivering solid performance. This was attributed to the rise in copper prices and an increase in defense sales. Looking ahead, copper prices are expected to remain strong due to economic recovery expectations and inflation hedge demand, leading NH Investment & Securities to maintain its investment opinion of 'Buy' and target price of 31,500 KRW for Poongsan.

Poongsan's provisional consolidated sales for the third quarter of this year amounted to 633.7 billion KRW, up 12.4% year-on-year, and operating profit was 48.4 billion KRW, increasing by 23,853.5%. Net income attributable to controlling shareholders turned positive at 33.4 billion KRW.

Byun Jong-man, a researcher at NH Investment & Securities, commented, "The announced results showed sales 4.0% below market consensus, but operating profit and net income attributable to controlling shareholders exceeded expectations by 7.6% and 14.3%, respectively."

On a separate basis, operating profit was 30.7 billion KRW. Although sales volume in the copper segment was 43,000 tons, showing only a slight improvement compared to the previous quarter, copper prices rose 20.4% quarter-on-quarter, and defense sales recovered to 156.2 billion KRW, driving profit improvement.

It was also explained that the consolidated overseas subsidiaries PMX (USA) and Siam Poongsan (Thailand) turned profitable from losses in the previous quarter, supported by rising metal prices and increased sales volume.

Researcher Byun forecasted, "In the short term, copper prices have been affected by the delay of additional US economic stimulus until after the presidential election and the spread of COVID-19, but looking toward next year, prices are expected to strengthen due to economic recovery expectations and inflation hedge demand."

He also projected the upper limit of copper prices at 8,000 USD per ton over 12 months. Researcher Byun stated, "Copper prices rose to 6,978 USD per ton on October 21 and slightly retreated to 6,717 USD per ton on the 29th."

US ammunition demand is also expected to remain strong. Researcher Byun noted, "From January to September this year, the number of background checks for firearm purchases in the US reached 28.83 million, surpassing last year's annual total of 28.37 million. In June alone, it hit a monthly record high of 3.93 million, causing a surge in ammunition demand. For reference, in 2016, the year of the presidential election, this indicator increased by 19.0% compared to the previous year."

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