[Click e-Stock] "Poongsan to Miss Q3 Estimates Due to Tariff Side Effects"

"Tariff Issues Are Temporary... Peak Season Expected in Q4"
Maintains Buy Rating and Target Price

On October 27, Korea Investment & Securities projected that Poongsan's third-quarter results would fall short of market expectations, as the anticipated effects of tariff policies failed to materialize. The firm maintained its "Buy" investment rating and kept its target price at 204,000 won.

Choi Moonseon, a researcher at Korea Investment & Securities, revised Poongsan’s consolidated operating profit estimate for the third quarter downward by 33%, from 94 billion won to 64 billion won. This figure is 19.3% lower than the market consensus of 78.8 billion won. Choi explained, "A 50% tariff was imposed on copper processed products, so an improvement in profits was expected for PMX, a wholly owned U.S. copper processing subsidiary. However, due to the burden of product prices, sales volume has plummeted since August, and the tariff effect has not been realized." He described this as a "side effect of the tariff policy." Additionally, some defense sector sales were deferred to the fourth quarter, further impacting performance.

However, Choi assessed that these factors behind the weak performance are temporary issues. He diagnosed that once the initial side effects of the tariff policy are resolved, profitability could recover through price increases for products in the U.S. market or through domestic production replacing imported products. Defense sector sales are also expected to be realized in the fourth quarter in line with annual contracts.

Choi added, "The fourth quarter is the peak season for the defense sector. The suspension of operations at Freeport-McMoran's Grasberg mine in Indonesia, combined with inventory reductions and seasonal demand increases, is expected to drive up copper prices. The prospect of visible defense exports to the Middle East is also likely to support a rise in the share price."

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