[Click eStock] Hanwha Solutions: Lowered Outlook for Second Half... Investment Rating Neutral

On July 31, Hana Securities downgraded its investment rating for Hanwha Solutions from Buy to Neutral and lowered its target price from 40,000 won to 33,000 won.

Yoon Jaesung, a researcher at Hana Securities, stated on this day, "We have revised our estimates for this year and next year."

Operating profit for the second quarter of this year was 102.1 billion won, turning to a profit compared to the same period last year, but it fell short of the market consensus by 27%. Although the chemical division reduced its losses, the recovery in the renewable energy segment was sluggish. Net profit attributable to controlling interests recorded a loss of 201.6 billion won, which was significantly below the market consensus. Operating profit from the renewable energy segment was 156.2 billion won, falling short of expectations. Operating profit from the residential energy segment was reduced to 55.2 billion won (operating margin of 12%).

Operating profit for the third quarter is expected to be 160.4 billion won. Compared to the same period last year, losses are expected to continue, and compared to the previous quarter, it is a significant swing back into the red. Researcher Yoon stated, "We forecast operating profit from the renewable energy segment at 123 billion won," explaining that "the increase in fixed costs is due to the impact of tariffs on raw materials and lower utilization rates caused by cell quality issues."

While the market consensus for operating profit in the second half of this year is 582 billion won, Hana Securities estimates a loss of 110.5 billion won. The estimate for next year was also lowered by 28% compared to previous projections. Researcher Yoon analyzed, "The residential energy business is facing a contraction in market size due to the reduction of the IRC 25D (Residential Clean Energy Tax Credit), as well as the potential emergence of competitors in the TPO (Third-Party Ownership) market, and increased selling expenses due to policy uncertainty."

Regarding the module business, he stated, "There will be increased costs due to tariffs on raw materials and the process of securing non-Chinese products," adding, "It will be difficult to fully pass these costs onto prices, at least in the second half of the year."

He added, "We plan to review the investment rating change at the beginning of next year," explaining, "This is because there is a possibility of a more positive environment if Chinese companies are unable to receive the US Advanced Manufacturing Production Credit (AMPC), and if anti-dumping tariffs are confirmed in Indonesia, Laos, and India."