[Click eStock] "Hanil Cement, Solid Profitability... Target Price Maintained"

Stable Profitability Expected Despite Shipment Decline
Positive Industry Outlook with Cement and Ready-Mix Price Increases
Attractive Dividends Highlighted by Strong Financial Structure

Shinhan Investment Corp. maintained its target price of 17,300 KRW and a 'Buy' rating on Hanil Cement on the 25th, citing no significant changes in earnings estimates. Hanil Cement's closing price on the previous trading day was 12,180 KRW.

Researchers Lee Ji-woo and Kim Sun-mi of Shinhan Investment Corp. stated, "The consolidated results for Q4 2023 recorded sales of 493.8 billion KRW and an operating profit of 64.7 billion KRW," adding, "The Remital division's growth was sustained due to favorable shipment volumes and price increases." However, they noted that the expanded decline in shipments from Hanil Hyundai Cement partially offset the earnings, and the cost ratio slightly increased compared to the previous quarter due to a year-end rise in thermal coal prices.

In 2024, profitability is expected to remain solid despite a decline in shipment volumes. The two researchers explained, "An expanded decline is inevitable due to the base effect from last year's shipment volumes, which showed strong performance, and a reduction in building construction starts," and added, "Regarding costs, electricity rates are expected to remain frozen in Q2, and thermal coal prices have stabilized in the 120-dollar range since early this year, so no significant fluctuations are anticipated."

Ultimately, the two researchers analyzed that maintaining profitability through price defense is crucial. Lee Ji-woo and Kim Sun-mi said, "The ideal business structure that can cover overall construction projects is advantageous for defending profitability compared to other companies," and emphasized, "In particular, Remital holds pricing power due to its monopoly, resulting in good profitability." There is also a positive outlook as remaining construction volumes are still present, and shipment volumes remain relatively favorable. Additionally, with the reflection of price increases in cement and ready-mixed concrete, no price discounts were observed in Q1.

The two researchers added, "Based on last year's record-breaking performance, the company delivered generous dividends," and stated, "Considering solid profitability, the strong financial structure (debt ratio of 66.8% and net debt ratio of 25.3% at the end of 2023) and recovered operating cash flow (246.2 billion KRW at the end of 2023) appear sustainable. We look forward to the highlighting of dividend attractiveness in 2024."