[Click eStock] "Hanon Systems, 'Earnings Decline + Overhang' Concerns, Target Price Down 37%"

Daishin Securities on the 8th lowered the target price of Hanon Systems by 37% to 4,900 KRW. This is due to the continued delay in earnings recovery and the potential risk of a large-scale share sale (overhang) by the major shareholder, the private equity fund (PE) Hahn & Company (Hahn & Co).

Kim Gwi-yeon, an analyst at Daishin Securities, predicted, "Hanon Systems is expected to record sales of 2.4 trillion KRW in the second quarter of this year, a 0.7% increase compared to the same period last year, but operating profit is expected to fall 52.4% to 68.4 billion KRW, below the market consensus."

Analyst Kim diagnosed, "The fixed cost burden due to the slowdown in electric vehicle (EV) demand continues, and European OEM (Original Equipment Manufacturer) volumes were also weaker than expected."

He added, "Amid poor performance, the overhang burden on Hahn & Co's 23% stake continues, so the target price was calculated by applying a 30% discount to the valuation of the competitor, Japan's Denso," advising, "It is necessary to approach additional investment somewhat conservatively."

However, he also noted, "There remains the possibility of earnings improvement due to Kia's EV3 launch, the operation of Hyundai Motor Group's EV plant in Georgia, USA, called Meta Plant (HMGMA), and supply to Mercedes-Benz's pure electric vehicle (BEV) platform."