[Click eStock] "Hanwha, Subsidiaries' Strong Performance and Corporate Governance Restructuring Expectations... Target Price Up"

Target Price Raised by 16% Compared to Previous Level

Daishin Securities raised the target price for Hanwha from 52,000 won to 60,000 won on the 11th, expecting continued performance improvement of its subsidiaries this year. The investment rating was maintained as 'Buy.'

Yang Ji-hwan, a researcher at Daishin Securities, explained, "The target price increase reflects the rise in net asset value (NAV) due to the stock price increase of subsidiaries such as Hanwha Aerospace, Hanwha Vision, and Hanwha Solutions. The equity value of the listed subsidiaries is about 14.2 trillion won, with the value of Hanwha Aerospace shares alone exceeding 10 trillion won, accounting for about 78% of the total NAV."

Hanwha's stock return is about 57% over one month and about 72% over three months. Researcher Yang said, "The reasons for the stock price increase are estimated to be the NAV increase due to the rise in stock prices of subsidiaries and affiliates, Hanwha Energy's increased stake in Hanwha to about 22% and the possibility of further stake expansion, and market expectations that the passage of the Commercial Act amendment could accelerate changes in Hanwha Group's control and succession structure. Although there may be a period and price adjustment due to the rapid rise in a short period, if the NAV supports it, the adjustment will not be significant."

Expectations for succession and governance restructuring are growing. Last year, Hanwha Energy expanded its stake in Hanwha to 22.2% through a public tender offer and acquisition of shares held by Korea Zinc. In addition, Hanwha Energy secured about 410 billion won in cash liquidity through the sale of Hanwha Ocean shares, raising market expectations for additional stake purchases. Researcher Yang analyzed, "The purpose of Hanwha Energy's acquisition of Hanwha shares is to strengthen responsible management as a major shareholder and enhance shareholder value, but since the three brothers Kim Dong-kwan, Kim Dong-won, and Kim Dong-sun hold 100% of the shares, expectations for succession and governance restructuring through a merger with Hanwha are increasing. Since the combined stake of the three brothers in Hanwha is only 9.2%, it is judged that the market expects succession and governance restructuring through a merger."

Market expectations that succession and governance restructuring could accelerate if the Commercial Act amendment passes are also contributing to the stock price increase. Researcher Yang said, "This is because the strengthened duty of loyalty of directors to all shareholders is being highlighted if the amendment passes."