NH Investment & Securities analyzed on the 13th that, despite a recent surge in Poongsan's stock price over a short period, the value of the institutional sector remains undervalued. It raised its target price from the previous 92,000 won to 115,000 won, a 25% increase, while maintaining its investment opinion of 'buy.' Poongsan's closing price on the previous trading day was 87,600 won.
NH Investment & Securities projected that Poongsan's second-quarter operating profit would decrease by 36.2% year-on-year to 103 billion won. While a profit decrease is expected compared to the previous year due to the base effect, it is anticipated to increase by 47.5% compared to the previous quarter due to rising defense exports.
Lee Jae-gwang, a researcher at NH Investment & Securities, noted, "Considering that the copper price applied to the sale of the new copper department is expected to average $9,454 in the second quarter, up 2.6% from the previous quarter, the marginal profit for the new copper sector will likely increase compared to the previous quarter." It is projected that defense exports will increase to 200 billion won, a 133% rise compared to the previous quarter, due to the delivery of previously ordered quantities.
The researcher remarked, "Poongsan is the only ammunition manufacturer in the country, producing a wide range of ammunition from small-caliber to large-caliber," and added, "As global demand for ammunition surges, the institutional sector performance continues to grow, recording the highest results ever last year, and growth is expected to continue this year."
He further stated, "While the average price-to-earnings ratio (PER: market capitalization ÷ net profit) of the five major defense industry stocks in the country, excluding Poongsan, is trading at about 30 times, Poongsan is trading at about 9 to 10 times," and he concluded, "The recent surge in stock prices over the last three transactions is considered a re-rating of the undervalued value of the institutional sector."