[Click eStock] "Pungsan's Q4 Operating Profit Expected to Exceed Previous Estimates"

by Oh Jooyean

Published 04 Jan.2021 08:06(KST)

[Asia Economy Reporter Oh Ju-yeon] Eugene Investment & Securities forecasted that Pungsan's consolidated operating profit for the fourth quarter of last year will exceed previous expectations.

According to Eugene Investment & Securities on the 4th, Pungsan's consolidated sales for the fourth quarter of last year are expected to increase by 10.3% year-on-year to 779.2 billion KRW, and operating profit is expected to rise by 255.6% to 59.4 billion KRW. This surpasses the previous estimate of 53 billion KRW.

Researcher Bang Min-jin analyzed, "The recovery in non-ferrous metal shipments is notable," adding, "Shipments, which averaged only 42,000 tons from the first to third quarters, are expected to increase by more than 6.0% year-on-year to around 47,000 tons." Demand is recovering mainly from finished car manufacturers, and this shipment recovery leads to stable fixed unit costs, contributing to the recovery of processing margins. Additionally, Researcher Bang said, "The average copper price applied in the fourth quarter also rose by about 10% quarter-on-quarter to around $6,825 per ton, improving inventory valuation gains."

Profits in the non-ferrous metal sector are expected to continue increasing in the first quarter of this year. Recently, copper prices have been around $7,800 per ton, and reflecting this, the profit momentum in the non-ferrous metal sector in the first quarter is expected to be clear. Although the defense export momentum is expected to slow moderately compared to 2020, when the US presidential election took place, the normalization of non-ferrous metal margins due to rising copper prices and shipment recovery is expected to offset this.

Accordingly, Eugene Investment & Securities maintained a "Buy" investment opinion on Pungsan and raised the target stock price by 12.5% from the previous 32,000 KRW to 36,000 KRW.