[Click eStock] "Hanon Systems, Continued Growth with a Diversified Portfolio"

[Asia Economy Reporter Eunmo Koo] Mirae Asset Daewoo expects that Hanon Systems will continue to have mid- to long-term growth potential based on the growth of the upstream industry and strong order competitiveness. Once the pandemic (global epidemic) subsides, its diversified portfolio and high sales of eco-friendly vehicles are expected to be strong investment points.

On the 1st, Kim Min-kyung, a researcher at Mirae Asset Daewoo, evaluated in a report that Hanon Systems recently experienced a period where its strengths acted as challenges. Researcher Kim stated, “The main investment points of Hanon Systems can be largely attributed to its diversified customer and regional portfolio and the high growth potential of the upstream industry (eco-friendly vehicles). However, these previously strong factors recently became burdens on performance, causing the stock price to underperform relatively.”

He analyzed, “During the global pandemic, while China and Korea recovered relatively early, the U.S. and Europe did not recover easily. This posed a risk factor for Hanon Systems, whose major customers are evenly distributed by region. Additionally, the rapid growth of the upstream industry and increased orders led to increased investment, which raised amortization burdens, negatively impacting the stock price.”

However, since the mid- to long-term growth potential based on the growth of the upstream industry and strong order competitiveness remains certain, once the pandemic ends, the diversified portfolio and high eco-friendly vehicle sales are expected to again become strong investment points. Researcher Kim evaluated, “Major automobile manufacturers in the U.S. and Europe resumed factory operations from late April to early May, indicating that production has bottomed out. Considering that automobile demand is deferred demand and that seasonality is strong toward the end of the year, the bottom has been passed.”

However, from the demand side, a decline in purchasing power is a concern, so in the short term, the signal for stock price recovery is expected to be the consumption promotion policies for automobiles and electric vehicles in major countries. Researcher Kim said, “In the U.S., expectations are rising for automobile stimulus measures in swing voter regions due to the presidential election issue, and sales data show a gradual recovery. In Europe, contrary to market concerns that the tightening of carbon dioxide emission regulations might be delayed, the policy stance is to strengthen support for eco-friendly vehicles. Through this, Europe’s eco-friendly vehicle policies are unlikely to be affected by short-term issues going forward.”