[Click eStock] "Hanon Systems Target Price 4,000 Won, Investment Opinion Neutral"

Daishin Securities maintained a target price of 4,000 KRW and a neutral investment rating for Hanon Systems on the 14th.

The appropriate price was calculated by applying a reasonable multiple of 10 times to the 2025 expected earnings per share (EPS) of 389 KRW, when a turnaround in performance is anticipated. In 2024, a change in the major shareholder of Hankook Tire and capital raising through a rights offering (600 billion KRW) are planned within the year.

Considering the potential share dilution (-12%) due to the rights offering and the possibility of a big bath from restructuring following the change in major shareholder, it was analyzed that the stock price momentum is inevitably limited. Therefore, the neutral (Marketperform) investment rating for Hanon Systems was maintained.

In the third quarter, sales reached 2.5 trillion KRW, operating profit (OP) was 93.8 billion KRW, and operating profit margin (OPM) was 3.8%. The operating profit significantly exceeded estimates because the customer cost recovery, originally scheduled for the fourth quarter, was reflected earlier. Excluding one-time gains, volume decreases, and favorable exchange rate effects, the actual strength of profitability improvement was judged to be limited.

After the change in major shareholder next year, capital raising through a rights offering and restructuring are expected. The acquisition process of the company by Hankook Tire is scheduled to be completed within the year after obtaining approvals from various countries. In this process, debt repayment (200 billion KRW) and operating funds (400 billion KRW) are planned to be raised through the rights offering. After the acquisition, there is a possibility of increased earnings volatility such as a big bath during the business restructuring process. An improvement in stock price is expected due to the completion of business restructuring, normalization of performance, and increased visibility of acquisition synergies.