Sangsangin Investment & Securities said on the 12th that Poongsan has upside at the current share-price level, considering strong copper prices and the value of its defense business. The firm raised its investment opinion to "Buy" from "Hold" and kept its target price at 150,000 won. Poongsan closed the previous session at 120,900 won.

Poongsan Holdings announces on the 4th that its subsidiary Poongsan Special Metals acquires 41% equity in Nexpo, a manufacturer and seller of lithium battery components. After the new share acquisition, Nexpo is set to join the POONGSAN Group as an affiliate. /Courtesy of POONGSAN Group

Sangsangin Investment & Securities estimated that Poongsan's operating profit in the fourth quarter of last year (Oct.–Dec.) rose 167% on-year to 90.5 billion won. That is slightly below the market consensus of 98.1 billion won.

Kim Jin-bum, an analyst at Sangsangin Investment & Securities, said, "Operating profit in the rolled products division will be 29.4 billion won, showing a clear improvement from the previous quarter," adding, "As LME copper prices surged in the fourth quarter, product selling prices rose above materials and supplies costs, reflecting about 10 billion won in metal gain."

However, for the defense institutional sector, the firm said profitability (OPM) expectations should be set lower than in the third quarter (Jul.–Sep.). Given the product mix's high domestic share, it judged that the scope for profitability improvement is limited. The analyst said, "As some domestic delivery volumes in certain institutional sectors were deferred to this year, revenue will come in at 439.1 billion won, below guidance."

Kim also expected copper price strength to continue this year. As the possibility of tariffs on copper products by a Trump administration has been discussed, the LME three-month copper price has risen 15.2% since December last year. Weekly U.S. imports of copper products have also turned to an uptrend.

He said, "From January to July last year, when tariff uncertainty intensified, copper price gaps between regions narrowed or inverted, but in December the gaps widened, which was notable," adding, "As inventory drawdowns in the London and Shanghai markets deepened, the effect of a widening premium in the U.S. market appears to have spread to other regions."

He added, "With uncertainty persisting around the Russia-Ukraine war, global geopolitical conflicts are likely to expand again this year," and "helped by product mix improvements and a recovery in profitability in the defense institutional sector, companywide operating profit will show a gradual uptrend."

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