Hanon Systems Q2 Earnings Expected to Decline... "Synergy After Sale Is Key"

[Asia Economy Reporter Jang Hyowon] Hanon Systems is expected to record sluggish performance in the second quarter. It is analyzed that the growth potential can be gauged once the acquiring party of Hanon Systems, which is currently being sold, is determined.

On the 17th, Korea Investment & Securities forecasted that Hanon Systems would record an operating profit of 102.3 billion KRW in the second quarter of this year, about 5.1% below the market consensus average. This is explained by the decrease in production of major customers due to a shortage of automotive semiconductors.

In particular, although the automobile market recovery continued in major countries such as the United States, Ford, the second largest customer accounting for 13% of sales, reduced production to half in the second quarter, which had a negative impact.

However, if the production of major customers recovers, Hanon Systems' performance is also expected to rise again. Jinwoo Kim, a researcher at Korea Investment & Securities, explained, "The air conditioning area, which has expanded indoors to batteries, is now broadening to motors, semiconductors, and charging," adding, "Thermal management is becoming important in future car areas such as electric vehicles and autonomous driving, and accordingly, the price of air conditioning parts within vehicle costs is steadily increasing."

Also, since the major shareholder is about to sell shares, it is analyzed that growth potential and strategy will vary depending on the acquiring party in the future. Hanon Systems went through a preliminary bidding in June and is expected to conduct the main bidding at the end of August.

Researcher Kim said, "The interest from Valeo, Mahle, and other 3rd and 4th ranked competitors in the same industry, who can create more definite synergy than other companies, is positive," and analyzed, "From the current shareholders' perspective, what is important is whether they meet an acquiring party that can continue growth through business synergy and shareholder-friendly policies."