[Click eStock] "Structural Improvement and New Business Expansion... Hanra Holdings Poised for Growth"

Active Entry into Aftermarket... Investment in Secondary Batteries and Eco-friendly Sectors

[Asia Economy Reporter Minwoo Lee] Halla Holdings is improving its business structure by increasing the profitability of its own operations while expanding its business areas such as the aftermarket.

On the 19th, IBK Investment & Securities maintained a 'Buy' rating and a target price of 75,000 KRW for Halla Holdings based on this background. The closing price the previous day was 48,850 KRW.

Halla Holdings recorded consolidated sales of 268.1 billion KRW and operating profit of 41.1 billion KRW in the third quarter of this year. Compared to the same period last year, sales increased by 30.3%, while operating profit decreased by 8.3%. Its own business increased by 41.0% compared to the same period last year and by 2.8% compared to the previous quarter. The automotive parts logistics, which accounts for nearly half of its own business, saw an increase in cargo volume, and sales of parts aftermarket and imported car parts procurement and modules also increased. However, equity-method profit sales decreased by 7.1%. Operating profit in the equity-method profit segment declined, but operating profit from its own business increased by 25.8%.

The improvement of the business structure and expansion of its own business are drawing attention. Before COVID-19, low-margin businesses were restructured to enhance the profitability of its own business, raising the quarterly operating profit margin of its own business to the low 4% range. Along with this, the business area expanded from logistics-centered to domestic and overseas aftermarket entry, imported car parts, and parts modules.

Researcher Jangwon Kim of IBK Investment & Securities analyzed, "The parts modules supplied to automakers have reached the expected level and can grow alongside the expansion of automakers. The imported car parts platform business linked with insurance companies started from the third quarter, and a local overseas corporation was also established to lay the foundation for expanding the aftermarket business."

They are also seeking new growth engines. Following the secondary battery separator company WCP, investments in eco-friendly companies are being considered. Researcher Kim explained, "Instead of regretting that this investment decision started as an equity investment, attention should be paid to the fact that it provides an opportunity to expand as a business partner along with the equity value."