[Featured Stocks] Hankook Tire and Hanon Systems Both Show Declining Trends

Kumho Tire & Technology and the acquired company Hanon Systems, which is considering the acquisition of Hanon Systems, are both experiencing a decline.

As of 9:48 a.m. on the 2nd, Kumho Tire & Technology is trading at 39,500 KRW on the KOSPI, down 1,950 KRW (4.70%) from the previous close. At the same time, Hanon Systems is trading at 3,930 KRW, down 325 KRW (7.64%).

Amid mixed expectations and concerns in the securities industry regarding Kumho Tire & Technology's acquisition of Hanon Systems, the market appears to be leaning towards concerns.

According to Hanon Systems' management disclosure published after the market closed on the 30th of last month, the number of shares and price per share for the acquisition of existing shares changed from 133.45 million shares to 122.774 million shares, and from 10,250 KRW to 10,000 KRW, respectively. Additionally, the number of new shares and price per share for the acquisition through a paid-in capital increase changed from 65.14496 million shares to 144.962552 million shares, and from 5,605 KRW to 4,139 KRW, respectively. Based on the revised plan, Kumho Tire will hold 372 million shares, owning 54.8% of Hanon Systems' stake.

Daishin Securities stated, "For a sustained upward trend, the completion of accounting treatment related to the share acquisition and paid-in capital increase, along with confirmation of Kumho Tire's shareholder return policy and Hanon Systems' management roadmap, will be necessary." They also analyzed that considering the potential damage to investment sentiment due to large cash outflows and uncertainty about synergy between the two companies, visibility of profitability improvement based on shareholder-friendly policies and the management roadmap is required.

Daol Investment & Securities also commented, "The direction of Kumho Tire's stock price is likely to depend on proving the justification for acquiring Hanon Systems for the time being." They added, "If Hanon Systems is recognized as a consolidated subsidiary, concerns about additional shareholder return capacity due to the current sharp increase in debt ratio exist, so verifying synergy between the two companies will act as a key variable for the stock price for some time."

DB Financial Investment pointed out that this choice is the "best option" for both companies. They stated, "As a result, since the number of new shares to be issued has increased by 123% compared to the previous plan, dilution of shareholder equity is inevitable." However, they argued, "If Kumho Tire's acquisition of Hanon Systems was something that had to happen eventually, both companies have made the best choice. From a long-term perspective, let's look forward to enhancing corporate value through synergy between the two companies."