[Click eStock] "Hanwha Spin-Off: Surviving Entity Expected to Offer Strong Stock Price Merit"

On January 15, SK Securities stated that Hanwha's recently announced spin-off and value enhancement plan are positive for its stock price, and that the remaining entity in particular will offer significant stock price merit.

Choi Gwansoon, a researcher at SK Securities, explained in a report released that day, "There are many cases, such as Hanwha Aerospace, Hanwha Vision, Samsung Biologics, and Samsung Epis Holdings, where separate evaluations of each business division have led to an increase in the combined market capitalization." He added, "The specific financial targets presented after the spin-off reduce uncertainty, and expectations for shareholder returns have risen due to the cancellation of treasury shares and the establishment of a minimum dividend."

He continued, "After the spin-off, the company stated that it is not considering the possibility of share transfers among major shareholders in the short term. In addition, as the likelihood of Hanwha Energy's short-term listing has decreased due to a partial stake sale (pre-IPO) by the largest shareholder, the discount to Hanwha's net asset value (NAV) is expected to gradually narrow."

The previous day, Hanwha announced a spin-off, separating into a surviving entity (Hanwha), which will handle defense, shipbuilding and marine, energy, and finance, and a newly established entity (tentatively named Hanwha Machinery & Services Holdings), which will focus on tech and life solutions. The split ratio between the surviving and new entities is 0.7634722 to 0.2365278. The split will take place on July 1, following a shareholders' meeting on June 15, with the new listing scheduled for July 24.

Choi especially highlighted the investment appeal of the surviving entity after the spin-off. Even if the majority of net borrowings (530 billion won as of the third quarter of 2025) are attributed to the surviving entity, about 90% of the equity value in key subsidiaries such as Hanwha Aerospace, Hanwha Solutions, and Hanwha Life Insurance will remain with the surviving entity. In addition, brand royalty income is also expected to be attributed to the surviving entity.

The value enhancement plan announced alongside the spin-off is also seen as robust. To reduce the holding company discount, Hanwha has set a target of achieving a return on equity (ROE) of 12% and an average annual consolidated sales growth rate of 10% from this year through 2030. As part of its shareholder return policy, Hanwha has decided to immediately cancel 4.45 million treasury shares (5.9%), set a minimum common stock dividend per share (DPS) of 1,000 won based on the 2026 payout, and fully buy back and cancel all first preferred shares.

Choi noted, "The company's willingness to enhance corporate value is evident in its voluntary cancellation of all treasury shares held, excluding those allocated for employee performance compensation." He further explained, "Given that the incentive to increase dividends emerged after Chairman Kim Seungyeon's share transfer last year, we can also expect a continued increase in the minimum dividend."