[Click eStock] "Hanatech, Volkswagen Partner... Undervalued Considering Technology"

[Asia Economy Reporter Ji Yeon-jin] Hana Financial Investment has issued a buy rating and a target price of 93,000 KRW for Hana Technology, stating that it is undervalued considering its technological capabilities and global references as a basis for growth potential.

Lee Jung-ki, a researcher at Hana Financial Investment, said, "Hana Technology has already established a production infrastructure in Yongin with an annual capacity of up to 500 billion KRW and officially registered as a partner with Volkswagen, which declared battery internalization, last October," adding, "This year, sales to Volkswagen are expected to occur, contributing to an increase in export proportions."

Hana Technology is the only domestic company capable of supplying turnkey equipment for secondary battery electrodes, assembly, and active pack processes. It has secured three major domestic battery manufacturers (LG Energy Solution, SK Innovation, Samsung SDI) as customers. Its main products include electrolyte filling machines and packaging equipment, and formation equipment, which are exclusively supplied to LG Energy Solution, Samsung SDI, and SK Innovation, respectively.

Last year, sales increased by 48.4% year-on-year to 88 billion KRW, but it turned to an operating loss of 4.5 billion KRW. This was due to an increase in cost of goods sold caused by a rise in net raw material purchases. The researcher stated, "Although the company recorded somewhat sluggish performance due to increased fixed costs in cost of sales such as self-quarantine expenses when overseas sales occurred and increased net purchases, this year, orders from global cell manufacturers and finished product companies are expected to increase, leading to improved performance in the second half," adding, "It is also expected that the 2020 new business (used battery inspection equipment and UTG display) performance will be added."

This year, sales are expected to increase by 178.3% year-on-year to 244.9 billion KRW, and operating profit is expected to turn positive to 30.2 billion KRW. In particular, annual sales to overseas clients are expected to grow from 2.5 billion KRW in 2020 to 49 billion KRW in 2021.