Shinhan Investment Securities said on the 7th that although the recent short-term share price surge for Korea Zinc(010130) is burdensome, future profit levels will justify it. The firm kept its "buy" rating and a target price of 1.6 million won.
Park Gwang-rae, an analyst at Shinhan Investment Securities, said, "Going forward, the share price is expected to be tied to whether the second-half sales volumes of gold and silver continue, whether precious metal metal gains occur in the fourth quarter, and events related to financial terms for 'Project Crucible.'"
Korea Zinc's second-quarter operating profit on a consolidation basis was 587.1 billion won, down 21.3% from the prior quarter but in line with market expectations of 594.9 billion won. Although silver revenue fell by 296 billion won due to a drop in silver prices and lower sales volumes, the standalone operating margin was 14.6%.
Park noted, "First-half gold and silver sales volumes exceeded the plan set at the start of the year," and projected, "In the second half, this trend will continue, with annual sales of 10 tons of gold and more than 2,100 tons of silver."
Park said, "A decline in the won-dollar exchange rate in the second half is a headwind, but the dissipation of negative lagging from the sharp drop in precious metal prices in the second quarter and the normalization of subsidiaries will offset it," adding, "A total 10.5 trillion won in planned capital expenditures (capex) next year and in 2028, and the funding rate and offtake terms for 'Project Crucible' will be the key factors determining the upper band of the multiple going forward."