[Click eStock] Hanwha Solutions, Earnings Growth Expected Next Year Following This Year... Top Chemical Pick

[Asia Economy Reporter Lee Seon-ae] Kiwoom Securities announced on the 12th that it maintains a buy rating and a target price of 60,000 KRW for Hanwha Solutions, presenting it as a top chemical pick along with LG Energy Solution.

Researcher Dongwook Lee of Kiwoom Securities explained, "Earnings for this year and next are expected to continue growing due to cost burden relief from increased polysilicon supply and an expanded proportion of specialty product lines," elaborating on the reasons for selecting it as a top chemical stock.

Hanwha Solutions' operating profit in Q4 last year was 183.6 billion KRW, up 2.9% from the previous quarter, and is expected to record solid performance compared to domestic competing chemical companies.

In the chemical division, key products such as caustic soda, PVC, LDPE, and EVA benefited from rising coal prices in China, and sustained strong profitability compared to other general-purpose chemical products due to continued favorable conditions in the downstream industry. Although the Q CELLS division is expected to maintain losses following the previous quarter, selling prices and volumes improved in key markets including Europe, the United States, and Korea.

Despite overall earnings growth for chemical companies being limited this year due to the cold wave effect in the US in the first half of last year, Hanwha Solutions is expected to continue its earnings growth trend this year and next.

This year, the strong supply-demand situation for key chemical division products LDPE, EVA, caustic soda, and PVC is expected to continue, while a sharp increase in polysilicon supply is causing polysilicon and wafer prices to decline. Additionally, reduced logistics disruptions are easing transportation cost burdens, and the large-scale earnings improvement in the Q CELLS division (YoY +269.8 billion KRW) is anticipated due to the expansion of power generation business sales deferred from last year.

Next year, the positive earnings improvement effect in the Q CELLS division is expected to continue, along with the establishment of a high-purity Cresol plant, operation of expanded hydrogen storage tanks by Hanwha Cimarron, and expanded sales of solar N-type TOPCon modules. These factors will increase the specialty product proportions in the chemical, advanced materials, and Q CELLS divisions, sustaining the earnings growth trend.