[Click e-Stock] "Hankook Tire & Technology Expands Dividend Payout Ratio... Target Price Maintained"

"Participation Scale in Halla On System's Paid-In Capital Increase Needs to Be Watched"

On August 22, Hana Securities maintained its "Buy" investment rating and target price of 48,000 won for Hankook Tire & Technology, stating that the company's expansion of its dividend payout ratio is a positive development. The previous day's closing price was 40,250 won.

On this day, Song Sunjae, a researcher at Hana Securities, commented, "It is positive that Hankook Tire & Technology has advanced its shareholder return policy by raising its target dividend payout ratio from 22% last year to an expected 35% in 2027."

The scale of participation in the paid-in capital increase of its subsidiary, Halla On System, is a factor to watch. On August 18, Hana Securities had lowered its target price for Hankook Tire & Technology from 50,000 won to 48,000 won. Song explained, "While the tire division's second-quarter results slightly missed expectations, further capital injection into Halla On System, which offers limited synergy and has a low return on equity (ROE), is considered negative from a shareholder value perspective."

He continued, "Although Halla On System may recover its performance through restructuring and financial improvements, even after the paid-in capital increase (estimated at around 800 billion to 1 trillion won), net debt and the debt ratio will remain high. Therefore, it will take time to reduce the burden of high interest expenses compared to operating cash flow." He added, "Since uncertainties still remain, we plan to review the details to be finalized on September 23 and then readjust our target price for Hankook Tire & Technology."

Meanwhile, on August 20, Hankook Tire & Technology announced an upgrade to its dividend policy. The main points are: ▲expanding the dividend payout ratio to 35% based on adjusted net profit excluding one-off non-operating gains and losses in the tire division over the next three years starting this year; ▲implementing interim dividends starting this year. If the dividend payout ratio increases to 25% this year, 30% next year, and 35% in 2027, the dividend per share is expected to rise to 2,400 won this year, 3,000 won next year, and 3,500 won in 2027.

Regarding this, Song stated, "Based on the current share price, the expected dividend yield will rise to 5.8% this year, 7.3% next year, and 8.5% in 2027. Such an increase in dividend yield will serve as a factor limiting the decline in the share price," he added.