[Click eStock] "Korea Zinc, Reflecting Kemco Stake Increase... Target Price Up"

Target Price Raised from 630,000 Won to 670,000 Won

Hana Securities raised the target price for Korea Zinc from 630,000 KRW to 670,000 KRW on the 8th, reflecting the increase in Kemco's shareholding. The investment rating was maintained at 'Buy'.

Kemco, a company that manufactures and sells nickel sulfate, a key material for cathode active materials, was incorporated as a subsidiary of Korea Zinc in November last year. Korea Zinc increased its stake from 35% to 64% by investing an additional 148 billion KRW. This established a system to stably procure nickel, a core mineral for secondary batteries.

Seongbong Park, a researcher at Hana Securities, said, "The decline in zinc prices that continued until last fall negatively affected Korea Zinc's profitability, but the possibility of further decline is considered limited." He added, "On the other hand, the current stock price has limited valuation pressure, and good operating performance is expected this year." Although steel demand in China is sluggish in the first quarter due to winter seasonality, the Lunar New Year special demand in February is expected to have a positive effect. At the same time, since some zinc mines have experienced profitability deterioration and operational disruptions due to fires since last fall, the possibility of supply reduction is high, so the average LME zinc price in the first quarter is expected to rise slightly compared to the fourth quarter. Additionally, the strength of precious metal prices is also expected to positively impact Korea Zinc's performance.

Meanwhile, Korea Zinc's consolidated sales for the fourth quarter of 2023 are expected to exceed market consensus (average forecast), with sales of 2.7 trillion KRW and operating profit of 212.3 billion KRW. This is because the sales volume of all major metals in the fourth quarter is expected to increase compared to the previous quarter. Specifically, zinc increased by 0.4%, lead by 27.9%, gold by 9.6%, and silver by 0.3%. In particular, Australia’s SMC appears to have improved profitability as it escaped from sales sluggishness related to expansion until the third quarter and entered a stable trajectory.

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