KOSPISteel & Metals103140

Poongsan

₩79,200▲ 1.67%2026-10-02 close

Market Cap

₩2.2T

Turnover

₩6.6B

Volume

80,000 shares

Shares out.

28M

PER

10.6×

PBR

0.9×

EPS

₩7,391

Dividend Yield

2.17%

PER, EPS, PBR and BPS are calculated in-house from the last 4 quarters (2025Q3–2026Q2) · Dividend yield is based on ₩1,700 per share · Prices as of the 2026-10-02 close

Report overview

Ammo Drives Profit, Copper Drives Sales — Recovery Meets Deal Risk

Copper fabrication supplies most of the revenue while ammunition supplies more than half of the profit; quarterly operating margins recovered in the first half of 2026, yet the ammunition-unit sale, governance questions and copper price swings all remain open variables.

1
Second-quarter 2026 consolidated revenue was KRW 1,470.3bn with operating profit of KRW 125.2bn, up 13.6% and 33.8% year on year, and the quarterly operating margin recovered from the 3% range in the third quarter of 2025 to the 8% range.
2
The company said it expects third-quarter 2026 parent-basis revenue of KRW 1,304.4bn and pre-tax profit of KRW 110.0bn, with nine-month cumulative guidance of KRW 3,395.4bn in revenue and KRW 313.8bn in pre-tax profit.
3
Defense operates Korea's only integrated ammunition production chain, contributing far more to profit than to revenue, but domestic delivery slippage and U.S. sporting-ammunition tariffs also amplify quarterly volatility.
4
In April 2026 Hanwha Aerospace halted its review of acquiring the ammunition business and the company denied pursuing a sale, but the market continues to discuss a possible business restructuring tied to succession and governance issues.
5
Operating cash flow was negative for full-year 2025 and consolidated liabilities and borrowings had increased by end-June 2026, leaving working capital and balance-sheet trends as a check point separate from the earnings recovery.

Business structure

Poongsan runs two businesses in parallel: copper and copper-alloy fabrication, and ammunition manufacturing. Fabrication is the revenue engine; on a parent basis for 2025, fabrication revenue was reported at KRW 2,662.3bn versus KRW 1,186.8bn for the defense unit (Bizwatch, April 2026).

Defense accounted for 30.8% of total revenue in 2025 (KRW 1,186.8bn) but is estimated to contribute 60-70% of profit (Bloter, April 2026).

The company is Korea's only integrated ammunition producer, making every type of round used by the Korean military from 5.56mm rifle ammunition to 155mm artillery shells; its share is undisclosed for security reasons but is seen by the industry as close to 100%.

The defense unit covers not only finished rounds but also propellants, materials and components, precision forgings, and explosive filling and assembly within one production chain.

Customers are the government and military at home and, for exports, markets such as Poland, the Middle East and Southeast Asia, where ammunition is packaged with platform exports such as the K9 self-propelled howitzer and K2 tank and sold across the full operating life of those systems.

On the commercial side, the company supplies its own brand of sporting ammunition to North America and other markets through its U.S. subsidiary PMC.

The fabrication unit spans sheet, rod and wire, and coin blanks, and the company is expanding copper products for eco-friendly vehicles, AI and data centers and energy storage systems while lifting exports of high-value automotive and electronics products.

Because both businesses share copper as their base material, raw-material prices move revenue and margins simultaneously, which is the defining feature of its competitive position.

Earnings trend

Quarterly revenue · Operating profit

₩1.3T₩93.6B25Q2₩1.2T₩42.6B25Q3₩1.4T₩91.5B25Q4₩1.3T₩90.2B26Q1₩1.5T₩125.2B26Q2

RevenueOperating profit

Annual revenue · Operating profit

₩4.4T₩231.6B2022₩4.1T₩228.6B2023₩4.6T₩323.8B2024₩5T₩297.4B2025

RevenueOperating profit

Quarterly results · Last 5 quarters
Quarter	Revenue	Operating profit	Op. margin
2025Q2	₩1.3T	₩93.6B	7.2%
2025Q3	₩1.2T	₩42.6B	3.6%
2025Q4	₩1.4T	₩91.5B	6.4%
2026Q1	₩1.3T	₩90.2B	7.1%
2026Q2	₩1.5T	₩125.2B	8.5%

Annual results
Year	Revenue	Operating profit	Net income (parent)	Op. margin	ROE	Debt-to-equity
2022	₩4.4T	₩231.6B	₩175.3B	5.3%	9.5%	84.3%
2023	₩4.1T	₩228.6B	₩156.4B	5.5%	8.0%	86.2%
2024	₩4.6T	₩323.8B	₩236B	7.1%	10.7%	86.3%
2025	₩5T	₩297.4B	₩147.2B	5.9%	6.4%	88.4%

Consolidated basis (financial statements including subsidiaries) · Final figures from DART filings · Net income attributable to owners of the parent · Data as of 2026-09-04

Earnings analysis

On an annual basis, revenue dipped from KRW 4,373.0bn in 2022 to KRW 4,125.3bn in 2023, then expanded to KRW 4,554.4bn in 2024 and KRW 5,048.6bn in 2025.

Operating profit, however, fell from KRW 323.8bn in 2024 to KRW 297.4bn in 2025, taking the operating margin from 7.1% to 5.9%, while net profit attributable to owners dropped from KRW 236.0bn to KRW 147.2bn.

Rising revenue alongside falling profit illustrates how raw-material prices, currency and export mix drive margins in this business. The quarterly path is clearer.

After a trough in the third quarter of 2025 with revenue of KRW 1,174.2bn and operating profit of KRW 42.6bn (a 3.6% margin), operating profit recovered to KRW 91.5bn in the fourth quarter of 2025, KRW 90.2bn in the first quarter of 2026 and KRW 125.2bn in the second quarter of 2026.

Second-quarter 2026 revenue of KRW 1,470.3bn came with an 8.5% operating margin, the highest of the five quarters provided, up 13.6% in revenue and 33.8% in operating profit year on year.

The company said second-quarter 2026 fabrication revenue rose 37% year on year to KRW 933.7bn on volumes of 47,300 tons, and that equity-method income of KRW 17.3bn was up KRW 17.5bn from the prior quarter.

Notably, in the fourth quarter of 2025 net profit attributable to owners was only KRW 8.8bn despite KRW 91.5bn of operating profit, pointing to sizeable non-operating items whose details need to be checked in the filings.

On cash flow, operating cash flow swung from an inflow of KRW 696.2bn in 2023 to an outflow of KRW 168.5bn in 2025, while the debt-to-equity ratio edged up from 86.3% in 2024 to 88.4% in 2025.

Industry analysis

The company faces two very different end markets. In defense, ammunition has regained attention as a consumable since the Russia-Ukraine war, and analysts note a growing number of countries placing separate ammunition orders to build wartime stockpiles.

It has also been argued that Korea's 2026 defense budget rose 8.2% year on year with the maneuver-and-firepower allocation up 8.8%, a favorable backdrop for domestic sales (Bloter, April 2026).

On capacity, 155mm output capability has risen from 100,000 to 250,000 rounds and 120mm from 20,000 to 40,000 rounds, an expansion centered on large-caliber lines.

In Europe, however, local production is being built in parallel: Poland agreed on joint 155mm shell production with Slovakia in February 2025 and with Northrop Grumman of the United States in February 2026, making the regional export landscape fluid.

For copper, cycle positioning is the crux: copper futures climbed toward record highs on signs of tightening supply, with Chinese refined output expected to fall for a second straight month as concentrate shortages weigh on run rates.

At the same time, deliveries into London Metal Exchange warehouses lifted inventories, easing part of the squeeze and pulling prices back (Trading Economics).

With a leading position in domestic copper fabrication and effectively sole-supplier status in domestic ammunition, the company is more exposed to company-specific supply-demand variables than to sector averages.

Outlook

Starting with the company's own figures, it guided to third-quarter 2026 parent-basis revenue of KRW 1,304.4bn and pre-tax profit of KRW 110.0bn, with nine-month cumulative revenue of KRW 3,395.4bn and pre-tax profit of KRW 313.8bn.

Its defense plan centers on booking deferred domestic volumes in the second half, shipping Middle East contract volumes on schedule, and winning additional large-caliber orders, while it expects restocking demand in the U.S. sporting ammunition market on the back of raw-material shortages and inventory imbalances.

Hana Securities said in a May 2026 report that the company had guided to annual defense revenue of KRW 1.37trn, implying second-half defense revenue nearly double the first half, and in the same report presented a Buy rating with a target price of KRW 160,000.

In fabrication, the plan is to expand sales of future growth products, diversify customers and export regions, and lift supply of copper products for AI and data centers and energy storage.

Overseas capacity is a question of pace: the company signed an agreement with Polish defense firm PGZ in 2023 to build a local plant, but it has been noted that this has yet to produce concrete results.

On the balance sheet, consolidated liabilities stood at KRW 2,560.6bn at end-June 2026, up 26% from the end of last year, with borrowings and bonds rising to KRW 1,258.7bn.

The second-half watch list therefore narrows to three items: whether defense guidance is met, how far copper prices and volumes lift fabrication margins, and whether the added working capital converts back into cash flow.

Valuation

PER

10.6×

PBR

0.9×

ROE

8.7%

EPS

₩7,391

BPS

₩89,493

Dividend per share

₩1,700

Because profit is concentrated in one segment while revenue sits in another, some market participants value the company by summing segments rather than applying a single multiple.

Korea Investment & Securities said in an April 2026 report that it valued the defense business at more than KRW 4trn and that the deal could not be declared definitively over, and it reportedly applied different multiples to the defense and fabrication segments (MTN, April 2026).

The price-to-book ratio trades below one, a discount to reported net assets, while the price-to-earnings ratio sits in a middle ground: below the average for listed Korean defense names but above that of traditional steel and non-ferrous materials peers.

Cash dividends have continued, but the dividend yield itself is not far from the market average, so the profit cycle rather than the payout drives the multiple.

Over several years, profit that had been rising through 2024 stepped back in 2025 before recovering in the first half of 2026, and the multiple hinges on whether that recovery persists. Exact multiples and dividend figures change daily, so the on-screen metric cards are the accurate reference.

PER, EPS, PBR and BPS are all calculated in-house (the same method as Naver and Toss) · Dividend yield = cash dividend per share from DART filings (supplemented by KRX) ÷ current price · As of 2026-09-04

Bull factors

A real recovery in quarterly margins

Margins improved for three consecutive quarters, from KRW 42.6bn in operating profit (a 3.6% margin) in the third quarter of 2025 to KRW 125.2bn (8.5%) in the second quarter of 2026. First-half 2026 operating profit of KRW 215.4bn already equals about 70% of the KRW 297.4bn earned in all of 2025.

The company said higher fabrication volumes, better selling prices and expanded exports drove the improvement, with second-quarter fabrication revenue up 37% year on year at KRW 933.7bn. That the recovery spans both volume and price is the core of the constructive case.

Hard-to-replace ammunition supply position

Domestically the customer is the government, and as Korea's only integrated ammunition maker the company supplies every caliber from rifle rounds to 155mm shells. It has also been reported that most business is done through negotiated contracts, so competitive bidding does not even arise (Bloter, April 2026).

On exports, a wider customer base for the K9 and K2 is expected to diversify ammunition exports from a Poland-centric structure toward the Middle East, Latin America and Eastern Europe. This structure leaves room for repeat revenue across a platform's service life even between individual orders.

Structural pillars of copper demand

Copper demand is increasingly framed around power grids and electric vehicles plus a newer pillar, AI data center investment.

On supply, signals of global tightening are providing a floor for prices, and top producer Chile is reported to expect a 2.6% decline in output this year owing to mine and project disruptions (Trading Economics).

The company plans to expand supply of copper products for eco-friendly vehicles, AI and data centers and energy storage, leaving room for mix improvement. In a rising metal-price environment, inventory valuation effects can also work in favor of margins.

Bear factors

Profit weight concentrated in one segment

Defense is estimated to contribute 60-70% of profit on roughly 30% of revenue, which means any disruption there swings group earnings sharply. Indeed, third-quarter 2025 operating profit fell to KRW 42.6bn, less than half the prior quarter.

For the first quarter of 2026, it was argued that weak defense results owed largely to one-off factors such as acceptance testing and Middle East logistics (Hana Securities, May 2026). The sheer amplitude of quarterly swings makes forecasting difficult.

Cash flow and borrowing burden

Operating cash flow was an outflow of KRW 168.5bn in 2025, against an inflow of KRW 696.2bn in 2023. Total liabilities rose from KRW 1,897.3bn in 2024 to KRW 2,031.1bn in 2025, taking the debt-to-equity ratio to 88.4%.

On top of that, consolidated liabilities reached KRW 2,560.6bn at end-June 2026, up 26% from the end of last year, with borrowings and bonds at KRW 1,258.7bn. When raw-material prices rise, inventories and receivables build too, potentially widening the gap between reported profit and cash.

Undecided direction on business restructuring

In April 2026 Poongsan said it was not pursuing a sale of the ammunition business, and Hanwha Aerospace disclosed that its acquisition review had been halted.

Yet investment bankers see the possibility of sale talks resurfacing because of succession: chairman Ryu Jin's eldest son holds U.S. citizenship, and Korean defense industry law effectively limits management of defense firms to Korean nationals (Korea Economic Daily, April 2026).

There is also precedent: a 2022 board resolution to spin off the defense unit was withdrawn after shareholder opposition. Until the method and timing of any restructuring are settled, shareholders cannot pin down the final shape of the portfolio.

Risk factors

Raw material and currency volatility

Copper prices affect both revenue and margins, and when the direction turns, inventory valuation effects reverse as well. London Metal Exchange inventories rose 20,000 tons in a day, the largest daily build since April, easing the squeeze and pulling prices back (Trading Economics).

A stronger won works against export profitability. Depending on the price and currency mix, quarterly profit can differ materially even at the same volume.

Trade and tariff policy

Commercial sporting ammunition is heavily weighted to North America and is directly exposed to trade policy.

For the second quarter of 2025, it was argued that U.S. sporting-ammunition tariffs cut headquarters export volumes and left subsidiary PMC bearing tariff-related costs, while higher industrial electricity rates and a stronger won hurt fabrication profitability (view attributed to Shinhan Securities, reported August 2025).

If tariff rates or coverage change again, both volume and margin assumptions for commercial ammunition shift with them. Because policy sits outside the company's control, it warrants continuous monitoring.

Governance and regulatory approval

Any restructuring of the ammunition business must clear multiple gates, including a special shareholder resolution and government review.

With Poongsan Holdings and related parties at 38.02%, the National Pension Service at 7.97% and minority holders totaling 45.63%, it has been argued that meeting a special-resolution threshold would require the pension fund and many minority holders to agree (Business Post, April 2026).

Industry observers have also noted that because the company is effectively the monopoly producer of domestic military ammunition, merger review could be onerous. Whichever route is chosen carries procedural risk and time.

What to watch next

Late October to early November 2026
Third-quarter 2026 results. Performance against the guided parent-basis revenue of KRW 1,304.4bn and pre-tax profit of KRW 110.0bn, and whether deferred domestic volumes actually landed in revenue, will be the first read on the second-half trajectory.
During the fourth quarter of 2026
Single-sales and supply contract filings tied to additional large-caliber orders and Middle East shipments. These are the most direct evidence of whether the KRW 1.37trn annual defense revenue guidance and its second-half weighting still hold.
Monthly from September 2026
Copper prices and London Metal Exchange inventory trends. Whether the inventory build that has been easing the supply squeeze continues will shape fabrication selling prices and inventory valuation effects.
January to February 2027
Full-year 2026 results, the dividend decision and 2027 guidance. Watch whether operating cash flow, negative in 2025, normalizes, and the direction of borrowings and bonds that had risen to KRW 1,258.7bn by end-June 2026.
Ad hoc, as disclosed
Any re-disclosure on business restructuring. Since both companies stated in April 2026 that no sale was being pursued and the acquisition review had stopped, a new inquiry response or board resolution would be the pivot for governance scenarios.

Overall view

Poongsan earns most of its revenue from copper fabrication and more than half of its profit from ammunition. On confirmed results, 2025 revenue grew to KRW 5,048.6bn but operating profit was KRW 297.4bn for a 5.9% margin, below the prior year, with the trough at KRW 42.6bn in the third quarter of 2025.

Profit then improved for three straight quarters, to KRW 91.5bn in the fourth quarter of 2025, KRW 90.2bn in the first quarter of 2026 and KRW 125.2bn in the second quarter of 2026, lifting the second-quarter operating margin to 8.5%.

For the second half, management points to booking deferred domestic defense volumes, shipping Middle East orders and winning more large-caliber contracts, and it said it expects third-quarter parent-basis revenue of KRW 1,304.4bn and pre-tax profit of KRW 110.0bn, with nine-month figures of KRW 3,395.4bn and KRW 313.8bn.

On the other side sit negative 2025 operating cash flow, consolidated liabilities up 26% by end-June 2026 with borrowings and bonds of KRW 1,258.7bn, and exposure to trade policy plus won and copper price swings.

In addition, even after the April 2026 disclosures that no sale was being pursued and the acquisition review had halted, the possibility of restructuring tied to succession remains open, widening the range of scenarios.

The practical approach is to verify four axes one by one through quarterly results and filings: durability of the margin recovery, delivery against defense guidance, the balance-sheet burden, and any restructuring disclosure. This report is for information purposes only and contains no buy or sell opinion and no target price.

Sources

Korea Exchange (KRX) — Prices · Market Cap · Volume
FSS electronic disclosure system (DART) — Financial statements · Dividend filings

Show 18 more articles and sources

Report written 2026-09-05 · Data as of 2026-09-04

This content is AI analysis of market data and web search results, provided for information only. It is not a solicitation or recommendation to invest. Investment decisions and their consequences are the investor's own responsibility. Data may be delayed or contain errors.