[Click eStock] "Hanon Systems, Stock Bottoming Out & EV3 Benefits... 'Buy' Investment Opinion Upgraded"

On the 3rd, Kiwoom Securities upgraded its investment rating on Hanon Systems from 'Market Perform' to 'Buy,' citing confirmation of a recent stock price bottom and expected benefits from Kia's EV3. The target price was maintained at 5,500 KRW.

Researcher Shin Yoon-chul stated, "We are upgrading our Market Perform rating on Hanon Systems, which we have maintained since November last year, to Buy," adding, "Despite the recent M&A difficulties being reflected in the stock price, it has held steady around 4,000 KRW, confirming a bottom."

He continued, "We believe that pursuing upside potential at the current price-to-book ratio (P/B) level, which is below 0.9 times, is not unreasonable," and added, "Starting with Kia's EV3, Hanon Systems' 4th generation battery thermal management system is expected to be installed in the subsequent new car lineup based on Hyundai Motor Group's BEV-dedicated platform."

He further said, "The downwardly revised second-half earnings consensus, which was proactively adjusted to reflect the weak first-half performance, is expected to show an upward revision trend in the future," and "A gradual recovery of foreign investor outflows, which intensified after failing to defend net profit in the first half due to increased interest expenses, is anticipated."

However, he noted a caveat that with the lowered full-year 2024 earnings outlook, immediate direct shareholder return policies are unlikely to be expected.

Researcher Shin Yoon-chul pointed out, "Hanon Systems is expected to update its 2024 earnings guidance, which was presented in the third-quarter earnings announcement last year," and added, "Although a downward revision of the annual operating profit, previously presented as 400 billion KRW, is inevitable, we believe the figure to be presented will exceed the market expectation, which has already been lowered to 321.6 billion KRW."