[Click eStock] "Korea Zinc, Earnings Improvement Expected Due to Zinc Price Surge... Target Price Up"

[Asia Economy Reporter Song Hwajeong] Hana Financial Investment on the 18th raised the target price for Korea Zinc from 580,000 KRW to 680,000 KRW, anticipating improved operating performance due to the sharp rise in zinc prices. The investment opinion was maintained as 'Buy.'

Favorable third-quarter results are expected due to rising metal prices and the KRW-USD exchange rate. Hana Financial Investment estimated Korea Zinc's third-quarter sales to increase by 20.2% year-on-year to 2.4 trillion KRW, and operating profit to rise by 6.1% to 283.6 billion KRW. Researcher Park Seongbong of Hana Financial Investment said, "Despite a decrease in sales volume, operating profit is expected to exceed market expectations (265.8 billion KRW) due to the overall increase in metal selling prices and the rise in the KRW-USD exchange rate."

Concerns over the U.S. Federal Reserve's tapering (asset purchase reduction) and deteriorating Chinese economic indicators caused the London Metal Exchange (LME) zinc price, which fell below 3,000 USD per ton at the end of August, to surge to 3,795 USD per ton by mid-October, reaching the highest level in 14 years. This was driven by expected production cuts at smelters whose profitability sharply deteriorated due to soaring energy prices. With natural gas prices soaring and renewable energy supply disruptions causing UK electricity prices to increase more than sevenfold year-on-year, European electricity prices hit record highs. Consequently, Nyrstar, Europe's largest zinc smelting company, announced plans to reduce production at its European plants (Netherlands, Belgium, France) by up to 50%. Researcher Park said, "Although production disruptions in downstream industries are expected due to power supply shortages, considering that Nyrstar's European plants hold a 4.8% global market share and that energy demand for power generation is expected to increase as winter approaches, the possibility of additional production cuts cannot be ruled out. Therefore, zinc prices are expected to remain strong due to tight supply and demand." Park added, "Korea Zinc's operating performance is expected to improve for some time due to the sharp rise in zinc prices, and the battery foil plant scheduled to start operation by the end of next year will also contribute to profitability improvement."

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