[Click eStock] "Hanon Systems Needs Time for Normalization"

Recorded a Deficit in 4Q Due to One-Time Restructuring Costs
Sales Declined Amid Weak EV Demand...Rebound Expected from 2Q

Hanon Systems, which has been incorporated into the Korea & Company Group, is expected to face uncertainty in corporate value for the time being. This is due to the need to reduce debt, improve the financial structure, and carry out cost structure work such as the consolidation of overseas production subsidiaries.

On the 14th, Daol Investment & Securities maintained its investment rating on Hanon Systems as 'Neutral (HOLD)' and lowered the target price by 5% to 3,800 KRW, citing these reasons. This implies that the appropriate price should fall by about 13% from the previous day's closing price of 4,360 KRW.

In the fourth quarter of last year, Hanon Systems recorded sales of 2.5498 trillion KRW and an operating loss of 98.8 billion KRW. Sales increased by 3.8% compared to the same period last year, but the company turned to a loss. The net loss for the period was also recorded at 293.9 billion KRW. This was influenced by one-time costs of 60.8 billion KRW and restructuring costs of 65.2 billion KRW. Additionally, impairment losses on tangible and intangible assets amounting to 130 billion KRW were reflected in non-operating items.

The one-time costs comprehensively included merger incentives, logistics costs related to Mexico, and accrual accounting items related to the supply chain. Some of these costs are expected to continue to be reflected this year as well. These are mainly expected to occur in Europe, where production subsidiaries are concentrated and where automobile demand is slowing and customers’ electric vehicle transition programs are delayed.

In particular, sales in China in the fourth quarter showed a weak performance, declining by 26% compared to the same period last year. Sales to Stellantis and BMW also decreased by 24% and 21%, respectively. Yoo Jiwung, a researcher at Daol Investment & Securities, analyzed, "There is overall sales uncertainty due to delays in electric vehicle shipments until the first quarter of this year," adding, "From the second quarter, sales improvement is expected as differentiated models are shipped by each customer."