[Click eStock] "Korea Zinc, Mid-to-Long-Term Appeal Up with New Business Investments"

Daishin Securities Report

[Asia Economy Reporter Minji Lee] Daishin Securities on the 5th issued a buy rating and a target price of 670,000 KRW for Korea Zinc. This is based on the record-high profits in the second quarter and the assessment that mid- to long-term attractiveness has increased due to investments in new businesses.

In the second quarter, sales reached 2.8513 trillion KRW and operating profit was 381.4 billion KRW, representing growth of 20% and 39.7% respectively compared to the same period last year. Operating profit exceeded market expectations, and the operating margin rose by 1.9 percentage points from a year ago to 13.4%.

Sales volume was 154,000 tons for zinc and 98,000 tons for lead, down 6% and 15.4% respectively year-on-year, indicating a delayed recovery. However, favorable profitability was recorded based on the rise in the LME zinc quarterly average price, an increase in zinc benchmark TC, and exchange rate appreciation.

Researcher Taehwan Lee of Daishin Securities said, “Although sales were sluggish in the first half, with most logistics disruptions resolved, sales volume improvement is expected in the second half,” adding, “This year’s sales volume guidance is 640,000 tons for zinc, 340,000 tons for lead, and 2,220 tons for silver.”

While the decline in metal prices is a burden, the effect of improved sales volume and exchange rate appreciation is expected to support profitability. Zinc inventories on the LME have continuously decreased to only 67,000 tons, and a price rebound is anticipated due to tight supply and demand caused by rising energy costs.

The company disclosed investments in resource circulation businesses following Korea Electric Materials (precursor), K-JAM (battery copper foil), and Epuron (renewable energy). In June, it acquired GSDK (steel dust recycling) for 94.8 billion KRW, and in July, it acquired Ignio Holdings (E-Scrap recycling) for 432.4 billion KRW.

Researcher Lee analyzed, “This is an active phase of new business expansion,” adding, “With excellent fundamentals combined with new business growth potential and stable profit generation, the attractiveness of mid- to long-term investment will increase further through additional new businesses.”

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