Shinhan Investment Securities said on the 10th that Korea Zinc is expected to benefit from expanding its business scope and from issues related to a management control dispute. It maintained its existing Buy rating and raised its target price by 6.32% to 925,000 won. As of the previous trading day, Korea Zinc's closing price was 1,024,000 won.
Korea Zinc posted revenue of 4.1598 trillion won and operating profit of 273.4 billion won in the third quarter of this year. Revenue rose 29.7% from a year earlier, and operating profit surged 82.3% from a year earlier.
Park Gwang-rae, an analyst at Shinhan Investment Securities, said the company is transforming from a traditional smelting firm into a comprehensive smelting and resource-circulation platform that spans precious metals, rare metals, copper and recycling, adding that the stock price has risen to a level exceeding fundamentals after the management control dispute issue was added.
However, net profit fell 78.2% from the previous quarter. Park noted that about 240 billion won in foreign exchange valuation losses occurred due to a rise in the won-dollar exchange rate at the end of the third quarter, adding that losses related to derivatives due to a surge in gold prices were also added.
Park also analyzed that the target price could be raised to above 1 million won.
Park said Korea Zinc's return on equity (ROE) is recovering steadily, and considering the valuations of corporations in other countries for rare metals, the current stock price is not at a significantly expensive level.
He said that if a new investment event emerges to allay concerns about a reverse base effect in the rare metals segment starting in the fourth quarter, an upward revision of the target price to above 1 million won would also be possible.