[Click eStock] "Hanon Systems, Major Shareholder Stake Sale Imminent, Focus on Preferred Negotiation Partner"

[Asia Economy Reporter Ji Yeon-jin] Korea Investment & Securities stated on the 10th that regarding Hanon Systems, attention should be paid to the imminent sale of the major shareholder's stake rather than the second-quarter earnings, maintaining a buy investment opinion and a target price of 19,000 won.

Hanon Systems' sales in the second quarter increased by 54.9% compared to the same period last year, and operating profit turned positive at 100.4 billion won. Sales slightly exceeded market expectations by 0.1%, while operating profit was 4.8% below the forecast. It is analyzed that the results fell short of expectations due to volume decreases caused by semiconductor shortages and Ford's production cuts, as well as increased costs from logistics and raw material price hikes.

Profitability by region is 4% in Korea, 5% in Europe, 4% in the Americas, 7% in others, and 5% in China, while the electric vehicle sales ratio by region is 25% in Korea, 30% in Europe, 25% in China, and 5% in the Americas.

As of last month, July, 64% of the annual order target ($1.1 billion) has been achieved, and the quarterly dividend per share was raised to 90 won from 80 won last year.

Hanon Systems is currently undergoing due diligence for the sale of Han & Company’s stake, and since the main bidding is scheduled for next month, it is expected that a preferred negotiation partner will be selected within this year.

Jinwoo Kim, a researcher at Korea Investment & Securities, said, "The weak second-quarter performance was expected, and more attention should be paid to the growing importance of air conditioning and the upcoming stake sale event," adding, "The air conditioning area, which has expanded indoors to batteries, now extends to motors, semiconductors, and charging, but there are still only a few companies capable of supplying verified products."

He added, "A major event of the major shareholder’s stake sale is imminent, and future growth potential and strategic changes are expected depending on the acquiring party," emphasizing, "In particular, the interest from industry competitors ranked 3rd and 4th, such as Valeo and Mahle, is positive, and there is a more definite possibility of synergy compared to other companies."