[Click eStock] "Hanwha Solutions' 'Surprise' Capital Increase... Fund Utilization Strategy Is Uninspired"

Funding for Existing Strategy Execution...Lack of Stock Price Upward Momentum
Posco Chemical, Emphasizing New Client Acquisition and Facility Expansion, Contrasts with CS Wind

[Asia Economy Reporter Minwoo Lee] Hanwha Solutions conducted a rights offering worth 1.2 trillion KRW after the market closed the previous day. Although it was a 'surprise' capital increase, since the announcement was made to execute an already disclosed growth strategy rather than to unveil a new business strategy, it is analyzed that it will be difficult to act as a catalyst for stock price appreciation.

On the 22nd, Samsung Securities lowered the target price for Hanwha Solutions by 8% to 55,000 KRW, citing this background. The closing price the previous day was 46,150 KRW. The investment rating of 'Buy' was maintained. While securing investment funds for the mid- to long-term growth engines of solar power and hydrogen is positive, it is difficult for the announcement to serve as a catalyst for stock price gains as it does not contain new information.

The day before, Hanwha Solutions disclosed that it had resolved to conduct a rights offering worth 1.2 trillion KRW (31,414,000 shares). This corresponds to 19.7% of the existing 159.86 million shares. The planned issue price is 38,200 KRW. Through this, the company announced plans to invest 1 trillion KRW in the solar power sector and 200 billion KRW in the hydrogen sector. Within solar power, funds will be used for next-generation product development and production (400 billion KRW), strengthening capabilities to acquire solar power generation assets (300 billion KRW), and distributed generation-based energy business (300 billion KRW). In the hydrogen sector, 100 billion KRW each will be invested in the water electrolysis business (hydrogen production) and hydrogen storage and distribution business.

Provided by Hanwha Solutions

Overall, the securing of funds for the growth engines of solar power and hydrogen is evaluated positively. Hyunryul Cho, a researcher at Samsung Securities, explained, "This allows the company to secure mid- to long-term competitiveness without damaging its financial structure," adding, "It also enables reinvestment of cash flow generated from the chemical business back into chemicals."

However, concerns have been raised about inevitable shareholder value dilution due to the scale of the capital increase. Considering only the size of the rights offering, shareholder value is estimated to decrease by 16.7%. Additionally, the absence of new business announcements is expected to have a negative impact. Researcher Cho said, "After recent capital increases, stock prices of POSCO Chemical and CS Wind rose because new growth drivers such as securing new customers or expansion through raised funds were newly highlighted," adding, "However, Hanwha Solutions' rights offering is an execution of an already disclosed strategy, so it is difficult for the capital raising to highlight new businesses, resulting in relatively insufficient short-term stock price momentum."

There is also a view that this could be an opportunity. Although it may be negative for the stock price in the short term, the trend of solar power companies receiving attention remains strong. Researcher Cho said, "The continued revaluation of solar power companies and the potential for hydrogen business value to be additionally reflected in the stock price in the mid- to long-term remain positive," concluding, "Therefore, the stock price adjustment period caused by the rights offering could be a buying opportunity."