[Special Stock] Hanwha and Hanwha Aero Surge on Chairman Kim Seung-yeon's 'Share Donation'

Hanwha Group Chairman Kim Seung-yeon’s news of gifting half of the shares of the holding company Hanwha Co., Ltd. to his three sons has caused related stocks such as Hanwha and Hanwha Aerospace to surge simultaneously in the domestic stock market on the morning of the 1st.

As of 9:15 a.m. that day, Hanwha’s stock price was trading at 45,850 KRW, up 11.97% compared to the previous session. This followed the announcement that Chairman Kim gifted 11.3% of the 22.6% stake he held in Hanwha to his three sons: Kim Dong-kwan, Vice Chairman of Hanwha Group; Kim Dong-won, President of Hanwha Life Insurance; and Kim Dong-sun, Vice President of Hanwha Galleria.

The company explained that this gift was intended to dispel market misunderstandings that the previously announced paid-in capital increase of Hanwha Aerospace and the acquisition of shares in Hanwha Ocean were related to management succession. Accordingly, Hanwha Aerospace, which had been declining since the large-scale paid-in capital increase announcement last month, recorded a rebound of around 8% that morning. Hanwha Ocean also rose by about 4%.

In the securities industry, this share gift is seen as significantly reducing concerns about a decline in Hanwha’s stock price. Yang Ji-hwan, a researcher at Daishin Securities, said, “It is true that after the sudden large-scale paid-in capital increase announcement of Hanwha Aerospace, concerns about the method of raising funds for Hanwha’s participation in the capital increase and the resulting damage to Hanwha’s corporate value were highlighted.” He analyzed, “The decision to gift shares is judged to express the group’s intention not to use any irregular methods related to succession to the market.” He predicted, “Hanwha, whose stock price was significantly adjusted due to a series of events, can now be re-evaluated for its equity and operating value due to the reduction of discount factors.”

Choi Kwan-soon, a researcher at SK Securities, also said, “This is a factor that resolves the uncertainty of Hanwha’s stock price related to succession,” and diagnosed, “Concerns about Hanwha’s stock price decline after Hanwha Energy’s listing have greatly decreased due to this share gift.” Researcher Choi maintained a buy rating on Hanwha and raised the target price from 44,000 KRW per share to 54,000 KRW.

Lee Dong-heon, a researcher at Shinhan Investment Corp., said, “This decision was made to resolve controversies related to Hanwha Aerospace’s paid-in capital increase,” but pointed out that “the Financial Supervisory Service’s approval procedure for the paid-in capital increase report remains.” He mentioned that although Hanwha Aerospace’s stock price fell by double digits after the paid-in capital increase announcement, it still rose by about 90% compared to the beginning of the year, and evaluated, “While the stock price shock from the large-scale paid-in capital increase was unavoidable, once the report is approved, it is a mid- to long-term buying opportunity.”