[Featured Stock] Hanon Systems Jumps 5% on Expanded Orders and Cost Reductions

Hanon Systems' share price is up more than 5%, supported by an expansion in orders from customers and the effects of cost reductions.

As of 9:51 a.m. on February 5, Hanon Systems was trading at 3,940 won, up 215 won (5.77%) from the previous trading day.

On the same day, Hyundai Motor Securities maintained its neutral investment opinion on Hanon Systems, but raised its target price by 10.5% from 3,800 won to 4,200 won.

Jang Moonsoo, an analyst at Hyundai Motor Securities, said, "Profitability is improving due to the renewed shift to electric vehicles and the expansion of orders from major customers, the increasing visibility of sales growth in electrification products, and reductions in major costs such as labor expenses," adding, "It is also a positive factor that the company announced plans to move up its target timing for achieving an operating margin of over 4% by one year."

However, he said, "To achieve the target operating margin of over 4%, which exceeds market expectations, a restructuring strategy that entails one-off short-term costs is inevitable," and added, "For the share price to rise further, the pace of restructuring, including improving operational efficiency through workforce adjustments, needs to accelerate."

Jang said, "Hanon Systems' operating profit in the fourth quarter of last year was 91.2 billion won, 11.9% higher than the consensus estimate of 81.5 billion won," and explained, "This appears to have been driven by increased sales in Europe thanks to a favorable exchange rate and strong performance by customers such as Mercedes-Benz, and expectations were further boosted by the company recovering around 90% of tariff costs from its customers."