[Click eStock] "Hanwha Solutions, Solar Power Demand Growth... Uptrend Resumes"

[Asia Economy Reporter Ji Yeon-jin] Shinhan Financial Investment announced on the 15th that it maintains a buy rating and a target price of 70,000 KRW for Hanwha Solutions, expecting the stock to resume its upward trend as concerns about overvaluation are alleviated due to earnings growth driven by increasing demand for solar power.

Hanwha Solutions is expected to achieve an operating profit of 231.5 billion KRW in the first quarter of this year, a 254% increase compared to the previous year. The main factors behind the strong performance are the elimination of one-time costs from the previous quarter and improved results in the chemical division. The chemical division's operating profit is expected to increase by 225% year-on-year to 214.8 billion KRW.

Lee Jin-myung, a senior researcher at Shinhan Financial Investment, stated, "The recovery of spreads for PVC, LDPE, as well as TDI and caustic soda, was influenced by supply disruptions caused by the US cold wave and steady demand," adding, "Solar power will return to profitability with the removal of one-time costs, but profitability is expected to remain at 0.8% due to ongoing raw material price pressures." Advanced materials are expected to turn profitable, while retail is anticipated to see a slight decrease in earnings due to a slowdown in the peak season effect.

The strong chemical market conditions are expected to continue through the second quarter due to the ongoing impact of the US cold wave and inventory accumulation demand. The chemical division's operating profit margin for the first half of the year is expected to be 19%, with a slight slowdown anticipated in the second half as supply normalizes. However, high profitability is expected to continue due to improved demand from economic recovery.

Additionally, the burden of raw material prices for solar power is expected to ease after the first quarter. Solar glass prices are declining due to capacity expansion, and wafers are also expected to stabilize downward due to large-scale expansion. According to BNEF, solar power demand this year is projected to reach 185 GW (+29%), driven by growth in China, the US, and Europe. The performance momentum of Hanwha Solutions is expected to further expand in the second half of the year due to increased shipments driven by demand growth in its main markets, the US and Europe, as well as downstream sales.