[Click eStock] "Hanwha Solutions, Benefiting from China's Power Shortage"

[Asia Economy Reporter Ji Yeon-jin] Kiwoom Securities announced on the 5th that amid the recent surge in caustic soda prices, China’s power shortage has slowed PVC production, leading to a decrease in the byproduct caustic soda production, and thus Hanwha Solutions is expected to gain a windfall benefit, raising its target stock price to 60,000 KRW.

As of the previous day, the price of caustic soda in Southeast Asia was $498 per ton, approaching $500 per ton for the first time since June 2018. With increasing demand for alumina and others, and shutdowns and regular maintenance of factories in the US and Asia, caustic soda prices have surged, according to analysis.

Hanwha Solutions holds the top domestic market share with a caustic soda production capacity of 840,000 tons, ranking 7th in the regional market. Lee Dong-wook, a researcher at Kiwoom Securities, stated, "China is experiencing a slowdown in PVC production due to power shortages, and the production of caustic soda, a byproduct, is simultaneously decreasing," adding, "Not only caustic soda but also the PVC business division is expected to greatly benefit from the power shortage originating in China."

Hanwha Solutions’ operating profit for the third quarter of this year is expected to slightly exceed market expectations (KRW 180.2 billion) at KRW 182.2 billion.

The hydrogen/CNG high-pressure tank business is also expected to enhance corporate value. At the end of last year, Hanwha Cimarron signed a contract with Sunbridge in the US to supply CNG transport tube trailers worth approximately KRW 300 billion, with each tube trailer expected to contain 18 of Hanwha Cimarron’s Jupiter Type 4 tanks. Additionally, Hanwha Solutions plans to invest about KRW 60 billion to build a high-pressure tank production facility in Alabama, USA; once the factory is completed in the second half of next year, it is expected to produce 4,000 high-pressure tanks annually.