A company that earns more than all of K-pop... yet brokerages’ target price is ‘wobbling’

[Financial News] The target price for Korea Zinc, a world-leading smelting company, has been lowered after its earnings fell short of market expectations. However, the recent share-price correction has already priced in much of the weak performance, and the growth potential of its integrated smelter in the United States is expected to drive an increase in corporate value over the long term.
Hyunwook Park, an analyst at Hyundai Motor Securities, analyzed on the 9th that Korea Zinc posted consolidated revenue of 6.0861 trillion won and operating profit of 141.7 billion won in the third quarter of this year. Operating profit fell 48% year on year and 76% quarter on quarter, coming in below market expectations. Weak precious-metal prices and a stronger won weighed on profitability. Operating profit on a non-consolidated basis was weak at 224.3 billion won. However, excluding Crucible Holdings, whose results reflected one-off factors, subsidiaries were assessed as having maintained solid performance.
Accordingly, the target price was cut by 9.2%, from 1.42 million won to 1.29 million won. This reflects weak earnings resulting from lower precious-metal prices and a stronger won.
A gradual recovery in earnings is expected in the fourth quarter. Analyst Hyunwook Park forecast Korea Zinc’s fourth-quarter operating profit at 203.6 billion won, saying, “It will improve from the previous quarter as the burden of using high-priced concentrates eases and volumes whose sales were delayed at SMC in Australia are reflected.”
Operating profit next year is estimated at 1.2886 trillion won. Prices of nonferrous metals may remain under pressure through the first half, but earnings could grow from the second half as U.S. benchmark rate hikes come to an end. Increased copper production and new germanium production are also expected to help support earnings.
The long-term growth driver is the integrated smelter in the United States. The U.S. smelter, which will produce zinc and rare metals, is scheduled to break ground in the first quarter of next year, begin producing zinc in the first quarter of 2029, and start producing lead and copper in the fourth quarter of the same year. Korea Zinc’s share price has historically risen ahead of expansions in zinc production capacity as the market priced them in, leading to the view that this investment could also be a positive catalyst for the stock.
Analyst Park said, “The target price was calculated by applying a fair price-to-earnings ratio (PER) of 33 times to next year’s estimated earnings per share (EPS). For the fair PER, we used the average of the upper-end figures for 2015, 2023 and 2025, taking into account the period of nonferrous metal price corrections and the market’s direction.”
[email protected] Han Young-jun Reporter