[Click eStock] "Pungsan, Positive Export Region Diversification... Target Price Up"

Stable Growth Expected in Defense Sector Due to Global Geopolitical Risks
Sluggish Performance in Nonferrous Metal Sector Likely to Continue in 2024 Amid China Recession

Shinhan Investment Corp. raised the target price for Poongsan from 51,000 KRW to 53,000 KRW on the 24th, citing expected stable growth in the defense sector due to diversification of export regions. The investment rating 'Buy' was maintained. Poongsan's closing price on the 23rd was 36,950 KRW.

Park Kwang-rae, a researcher at Shinhan Investment Corp., stated, "Poongsan's defense sales in 2024 are expected to reach 1.1 trillion KRW, an 11% increase compared to the previous year," adding, "The prolonged Russia-Ukraine and Israel-Palestine conflicts, along with the election of a pro-U.S. Taiwan president that has reignited U.S.-China tensions, are factors that could enable stable growth in the defense sector." He also noted that the diversification of overseas defense export regions, such as securing a small-caliber ammunition supply contract worth 113 billion KRW in Southeast Asia, is a positive factor.

However, the non-ferrous metals sector is expected to continue its sluggish performance in 2024. Researcher Park said, "The likelihood of a short-term rebound in China's manufacturing sector is low, and escalating diplomatic conflicts among major countries will negatively impact shipments," adding, "Copper prices may rebound to levels higher than in the second half of 2023, but due to the low base effect in the first half of 2023, the annual average price in 2024 is expected to decline."

The fourth-quarter 2023 earnings are expected to record sales of 1.2 trillion KRW and an operating profit of 67.3 billion KRW, in line with consensus (market average forecast). Researcher Park stated, "Due to sluggish demand in key downstream industries including IT, shipments are expected to be lower than anticipated at 43,800 tons, and the selling price will decline due to weak copper prices, making a decrease in non-ferrous metals sales inevitable compared to the previous quarter," adding, "Defense sales are expected to reach 376 billion KRW, marking the highest quarterly performance." Additionally, sales growth is expected as revenues that were not recognized in the third quarter due to contract signing delays will be recorded in the fourth quarter, along with the seasonal peak effect.

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