[Click eStock] Hanon Systems, M&A Delayed Due to Earnings Slowdown

[Asia Economy Reporter Junho Hwang] Samsung Securities maintained its investment opinion on Hanon Systems at 12,500 KRW on the 12th, stating that the company has a business structure that makes it difficult to pass on inflation and costs.

Hanon Systems' first-quarter sales amounted to 1.98 trillion KRW, a 5.9% increase compared to the previous year. However, the operating profit margin recorded a low of 1.5%. The burden of logistics and raw material costs lowered the profit margin. Nevertheless, non-operating performance was higher than market expectations due to an increase in foreign currency borrowings caused by the weak Korean won.

Samsung Securities identified the normalization of Hanon Systems' performance as the fourth quarter of this year. Eunyoung Lim, a researcher at Samsung Securities, stated, "As the rise in raw material prices and the peak-out of transportation costs are reflected with a time lag, the profit margin is expected to exceed 5% only by the fourth quarter of this year," adding, "M&A discussions are also expected to become active again at this time."