[Click eStock] "Hanwha Solutions, Expected Increase in US Solar Power Demand"

Shinhan Investment Corp. Report

Shinhan Investment Corp. analyzed on the 29th that Hanwha Solutions is expected to benefit from the tax incentives under the U.S. Inflation Reduction Act (IRA) as well as the increasing demand for solar power in the U.S. The investment opinion 'Buy' and the target price of 68,000 KRW were maintained.

Researcher Jinmyung Lee of Shinhan Investment Corp. said, "Operating profit for the first quarter of this year is expected to increase by 20% compared to the previous quarter to 218.7 billion KRW," and added, "Renewable energy operating profit and operating profit margin are forecasted to be 184.2 billion KRW and 13.1%, respectively."

Lee stated, "Although module sales performance will slow due to decreased shipment volume and weak selling prices, high profitability will continue thanks to the disappearance of one-time factors from the previous quarter and favorable spreads," and added, "Approximately 100 billion KRW in sales is expected from downstream sales, with contribution to earnings expanding in the 2nd and 3rd quarters."

He also emphasized, "By 2025, U.S. module production capacity is expected to reach 8.4 GW, accounting for 44% of total production capacity (Capa)," and "U.S. solar demand is anticipated to experience high growth at around 30 GW for the next several years, and the IRA tax incentives will shorten the investment recovery period."

In particular, he predicted that competitiveness will be further strengthened as the share of U.S.-bound modules, which have the highest market share in residential and commercial modules and higher selling prices compared to other countries, expands from 30% in 2021 to 70% by 2025.

Lee added, "Tax benefits from production tax credits will significantly expand from 187 billion KRW this year to 980.1 billion KRW in 2026, which will ultimately act as a factor increasing corporate value."

He further noted, "First Solar, the largest solar company in North America, mentioned in its earnings announcement that it can reflect IRA benefits in its profits, raised its guidance, and its stock price surged," and predicted, "Hanwha Solutions is expected to become the largest solar company in the U.S. alongside First Solar, and policy expectations will similarly have a positive effect."

However, he added, "Since trading is suspended until the 30th, after trading resumes on the 31st, the momentum of U.S. solar and valuation attractiveness are expected to be highlighted, enabling a stock price re-rating."