[Click eStock] "Hwasung R&A, Growth Improvement Needed"

Hana Securities analyzed on the 30th that Hwasung R&A, a company producing rubber products for automobiles, needs improvement in growth potential.

Hwasung R&A is a specialized manufacturer producing automotive rubber products such as Weather Strips (sealing products that prevent external noise, rain, dust, etc. from entering the vehicle interior, accounting for 40% of sales) and Hoses (components that deliver various oils and hydraulic fluids to major automotive devices, accounting for 60% of sales).

Song Seonjae, a researcher at Hana Securities, stated in a report on the same day, "Last year, sales and operating profit increased by 3% and 105%, respectively, recording 680.7 billion KRW and 31.8 billion KRW," and analyzed that this was due to increased production of finished vehicles, rising ASP of key products, and cost reduction activities.

However, he explained, "This year, annual sales and operating profit are expected to decrease by 3% and 5% to 660 billion KRW and 30.1 billion KRW, respectively," due to a decrease in domestic production volume by customers, reduction of low-profit products, and rising raw material prices.

He pointed out, "Currently, the stock price is trading at a valuation of around P/E 3 times and P/B 0.6 times based on this year's expected performance," and added, "Growth rate is relatively low as production is limited to Korea, and although the debt ratio has improved, it remains high at the mid-200% level, which is a discount factor, so improvement in this area is necessary."