[Click eStock] "Pungsan, Low Expectations for Copper Price Increase in Second Half"

Yuanta Securities Report

[Asia Economy Reporter Minji Lee] Yuanta Securities maintained a buy rating and a target price of 45,000 KRW for Pungsan on the 29th.

In the second quarter, Pungsan recorded sales of 1.1608 trillion KRW and an operating profit of 89.6 billion KRW, exceeding the market expectation of 80 billion KRW. The separate operating profit was 76 billion KRW, significantly surpassing the market estimate of 57 billion KRW.

The sales volume of non-ferrous metals was 50,000 tons, in line with market expectations. Among non-ferrous metal products, the sales proportion of relatively more profitable product groups slightly improved compared to the previous quarter. Defense sales amounted to 212 billion KRW. Although the metal gain size due to rising copper prices was expected to shrink compared to the previous quarter, it is estimated to have actually expanded. The consolidated subsidiary PMX recorded a slight operating loss due to inventory asset valuation losses caused by the decline in copper prices in June. In the case of PMC, operating profit improved as the export volume of ammunition to the United States increased compared to the previous quarter.

Copper prices rose for eight consecutive quarters from the third quarter of last year to the second quarter, generating metal gains. However, metal losses due to the decline in copper prices are expected in the second half. The average LME copper price, which exceeded 10,000 USD per ton in April, dropped to 9,377 USD per ton in May and 7,508 USD per ton in July. Researcher Hyunsoo Lee of Yuanta Securities said, “Overseas subsidiaries such as PMX and Siam will inevitably see a reduction in operating profit due to the decline in copper prices,” adding, “The defense sector has achieved better-than-expected results both in the US and outside the US, which will limit the decrease in operating profit caused by the sluggish non-ferrous metal sector in the second half.”

Researcher Lee continued, “Going forward, Pungsan will pursue profitability improvement through qualitative growth investments,” explaining, “Investments will continue to improve profitability compared to existing products by increasing rolling thin sheet production capacity and expanding plating lines.”

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