[Click eStock] "Poongsan, 2Q Defense Export Slump... Target Price Down"

Kiwoom Securities announced on the 31st that it is lowering the target price for Pungsan from 57,000 KRW to 53,000 KRW. The investment rating was maintained at 'Buy.'

Pungsan recorded an operating profit of 53.9 billion KRW in the second quarter of this year, down 40% compared to the same period last year. This is the lowest level since the first quarter of 2021 and fell significantly short of the market expectation of 70.3 billion KRW. Due to delays in some contracts, defense export revenue dropped 46% year-on-year to 80.2 billion KRW, resulting in weaker-than-expected profitability in the defense sector. Additionally, the overseas non-ferrous metal business subsidiary underperformed due to inventory-related losses caused by weak copper prices.

Pungsan provided a sales guidance of 220 billion KRW for the defense sector in the third quarter. Of this, exports are expected to normalize at 121.7 billion KRW.

With China's economic momentum weakening, copper prices fell in the second quarter. However, as the Chinese government is likely to announce additional stimulus measures focused on real estate and consumption, upward pressure on copper prices is expected to increase until the end of the year.

Jonghyung Lee, a researcher at Kiwoom Securities, said, "Although the second-quarter performance is disappointing, with the opening of the European defense export market, the company's defense business has entered a structural growth phase. Considering the high possibility of a copper price rebound within the third quarter, it is still too early to be disappointed."

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