[Click eStock] "Hansol Paper, Strengthening Earnings Momentum in the Second Half"

[Asia Economy Reporter Song Hwajeong] Hyundai Motor Securities on the 26th raised the target price of Hansol Paper from the previous 24,000 KRW to 24,000 KRW, expecting a possible stock price revaluation along with strengthened earnings momentum in the second half of the year. The investment opinion was maintained as 'Buy.'

Earnings momentum is expected to significantly strengthen starting from the third quarter. Hyundai Motor Securities estimated Hansol Paper's third-quarter standalone sales to increase by 15.2% year-on-year to 389.5 billion KRW, and operating profit to increase by 129.7% to 35.6 billion KRW. Researcher Park Jongryeol of Hyundai Motor Securities analyzed, "Hansol Paper is expected to record favorable earnings in the third quarter by compensating for the sluggish performance in the first half," adding, "This is because the printing paper and specialty paper segments will continue their profitable structure following the previous quarter, and the operating profit of the industrial paper segment will significantly increase." Although sales and operating profit of industrial paper declined in the second quarter due to a temporary production halt caused by accelerated investment, they are expected to increase sharply year-on-year in the third quarter as normal production resumes and volume growth effects combine. The turnaround to profitability in printing paper and specialty paper, which had shown losses since the second half of last year, is also expected to contribute significantly to profit growth.

The 9% price increase in early June for printing paper and industrial paper (whiteboard paper) due to rising pulp and base paper prices is also positively impacting profitability improvement. Researcher Park said, "With margin spread improvement, the printing paper segment will maintain its profitable trend, and the operating profit margin of the industrial paper segment will also improve."

Earnings momentum is expected to continue strengthening in the second half of the year. Researcher Park explained, "Along with the low base effect from last year, sales and operating profit growth in industrial paper is possible, and the turnaround to profitability in the sluggish printing paper segment will have a positive effect," adding, "Although specialty paper is somewhat slower, there is sufficient potential for earnings improvement due to increased demand from the global economic recovery in the second half."