[Click eStock] "Pungsan, Operating Profit Expected to Rise Due to Increase in Copper Prices"

Hana Financial Investment Report

[Asia Economy Reporter Minji Lee] Hana Financial Investment maintained a buy rating and a target price of 44,000 KRW for Pungsan on the 6th. This is based on expectations that stable performance will continue this year due to rising copper prices and favorable defense exports.

In the first quarter, Pungsan's sales and operating profit were 888 billion KRW and 47.4 billion KRW respectively, representing growth of 22.5% compared to the same period last year. Operating profit is expected to decline by 24.2%. Although operating profit is projected to decrease compared to last year, it is estimated to exceed the market consensus of 41.9 billion KRW.

This is attributed to solid defense sales (108.9 billion KRW) driven by strong exports, steady refined copper sales volume (47,000 tons), and a 2.9% increase in LME copper prices compared to the previous quarter, which is expected to generate nearly 10 billion KRW in metal gain effects.

The LME copper price, which reached an all-time high of 17,300 USD per ton in early March, was slightly adjusted due to lockdowns caused by the spread of COVID-19 in China, but as of early April, it still exceeds 10,000 USD per ton. This is because concerns over global copper supply disruptions continue amid the prolonged Russia-Ukraine war. Russia accounts for 4% of the world's copper concentrate and refined copper production.

Expectations for the Chinese government's aggressive infrastructure investment-centered economic stimulus are also positive. Although China's first-quarter economic indicators showed a slowdown due to city lockdowns from the COVID-19 spread, the aggressive infrastructure investment policy by the Chinese government is expected to take effect going forward. Researcher Seongbong Park said, "Recently, local governments in China have begun to ease regulations on real estate," adding, "Tight global copper supply and demand centered on China will continue, and copper prices are expected to exceed 9,000 USD per ton within the year."

Researcher Park explained, "Strong operating performance is expected due to high copper prices and expanded export-centered defense sales," and added, "The current stock price has a price-to-book ratio (PBR) of 0.52, so valuation pressure is limited."

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