Hana Securities forecasted on 4th that Poongsan's defense sales would decrease in the third quarter of this year, leading to a drop in operating profit. However, considering the long-term upward trend in defense sales, it revised its target stock price from 80,000 won to 160,000 won and maintained its investment opinion of 'buy'. The closing price of Poongsan on the previous trading day was 135,500 won.
In the second quarter of this year, Poongsan's consolidated sales amounted to 1.3 trillion won, a 4.9% increase from the previous year, while operating profit was 93.6 billion won, a 42% decrease. Operating profit fell short of the market expectation of 113 billion won.
Sales of copper for automobiles and energy storage systems (ESS) increased, while the average price of copper on the London Metal Exchange (LME) reached $9,524 in the second quarter, generating a metal-related profit of 2.5 billion won. In defense, despite a drop in exports of sports ammunition to the U.S. due to uncertainties regarding tariffs, total sales reached 345.4 billion won due to expanded exports of other military products and strong domestic sales.
Park Seong-bong, a researcher at Hana Securities, noted, "Compared to the same period last year, the defense profit margin shrank from 28% to 21% due to an increase in the domestic market share and a reduction in the mix of high-margin products, and the additional costs reflected due to U.S. tariffs had a negative impact."
In the third quarter of this year, considering the concerns over U.S. copper tariffs, it appears that copper prices will not rise due to accumulated copper stocks in the U.S., Park stated, "Regarding defense, domestic sales will slightly increase, but exports will significantly decrease, estimating the operating profit for the third quarter to be 63.5 billion won, a 14.6% decrease from the previous year."
He added, "However, the profits from the defense division have surpassed half of the total corporate profits, and I expect that defense sales will steadily increase in the future," stating, "In the short term, a stable trend in copper prices is anticipated, while I believe that there will be continuous growth in defense sales in the long term."