[Edaily Reporter Kim Hyung-il ] HYUNDAI MOTOR SECURITIES has lowered its target price for KoreaZinc(010130)by 9.2%, from 1.42 million won to 1.29 million won, reflecting weak earnings due to falling precious metal prices and a strong Korean won. However, the firm noted that the recent stock price correction has already largely factored in the weak earnings, and it expects the long-term growth potential of the company’s integrated smelter in the U.S. to drive an increase in corporate value. The firm maintained its “Buy” rating.

On the 9th, Park Hyun-wook, an analyst at HYUNDAI MOTOR SECURITIES, reported that KoreaZinc’s consolidated revenue for the third quarter of this year totaled 6.0861 trillion won, with operating profit at 141.7 billion won. Operating profit fell 48% year-over-year and 76% quarter-over-quarter, falling short of market expectations. Weak precious metal prices and a strong Korean won weighed on profitability.

On a non-consolidated basis, operating profit was weak at 224.3 billion won. However, analysts noted that excluding Crucible Holdings—which reflected one-time factors—the performance of the company’s subsidiaries remained solid.

A moderate recovery in earnings is expected in the fourth quarter. HYUNDAI MOTOR SECURITIES projected KoreaZinc’s fourth-quarter operating profit at 203.6 billion won. The firm anticipates an improvement over the previous quarter as the burden of using high-priced concentrate is alleviated and sales of volumes previously delayed at SMC in Australia are reflected.

Operating profit for next year is estimated at 1.2886 trillion won. While non-ferrous metal prices may continue to adjust through the first half of the year, the firm anticipates earnings growth starting in the second half as U.S. interest rate hikes come to an end. Expanded copper production and new germanium production are also expected to help sustain profits.

The long-term growth driver is the integrated smelter in the U.S. The U.S. smelter, which will produce zinc and rare metals, is scheduled to break ground in the first quarter of next year, begin zinc production in the first quarter of 2029, and start lead and copper production in the fourth quarter of the same year. Analysts note that, just as KoreaZinc’s stock price has historically risen in anticipation of expansions in zinc production capacity, this investment could also serve as a positive catalyst for the stock price.

Analyst Park stated, “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),” adding, “The fair PER was determined by applying the upper-end average of the ratios from 2015, 2023, and 2025, taking into account periods of non-ferrous metal price adjustments and market trends.”