[Click eStock] "Hanwha, Last Year Was the Bottom"... Target Price Upward Revised

[Asia Economy Reporter Ji Yeon-jin] KTB Investment & Securities announced on the 2nd that it has raised the target stock price to 34,000 KRW, reflecting expectations that Hanwha's standalone business will bottom out starting last year.

Last year, Hanwha's annual standalone business performance recorded sales of 4 trillion KRW (-9.8%) and operating profit of 167 billion KRW (-11.6%). Among these, the manufacturing division's annual sales increased by 2.9% year-on-year to 2.59 trillion KRW, and operating profit rose by 23.5% to 195.3 billion KRW. It is important to consider that full operations resumed from the fourth quarter of the same year following a factory accident in February 2019. In 2018, when exports and other factors were booming, the manufacturing division's sales were 3.1 trillion KRW, and operating profit was 278.7 billion KRW.

This year, standalone business sales are estimated at 4.1 trillion KRW (+5.2%) and operating profit at 224 billion KRW (+34.3%). This estimate is based on the assumption that demand and some delayed sales will recover. In the case of Hanwha Construction, domestic business is favorable, but overseas sales, which had increased from 700 billion KRW to 900 billion KRW between 2017 and 2019, decreased by 400 billion KRW last year due to the suspension of overseas sites such as Iraq. Reflecting this, this year's sales are estimated at 2.96 trillion KRW, with operating profit at 163 billion KRW.

Han-i Kim, a researcher at KTB Investment & Securities, said, "Although the recovery of the standalone manufacturing division's performance, which was expected to improve, is still slow, since order backlogs and other data are not disclosed due to the nature of the business, a rebound as an individual stock is expected when improvements are confirmed in quarterly results this year." He added, "It is necessary to consider that the main driver of the stock price remains the equity value of listed affiliates, and due to the characteristics of holding companies, the stock price tends to be less volatile."