From 20,000 Won to 40,000 Won in a Week... Hanwha Solutions Surges on Musk-Driven Hype [This Week's Hot Stock]

Share price jumps from the 20,000-won range to the 40,000-won range in just one week
"There is optimism about a recovery in the renewable energy business"
Rising mid- to long-term expectations on the back of space-based solar power

Expectations for space-based solar power are drawing strong interest in Hanwha Solutions from brokerage firms in Yeouido. Although the company’s earnings in the fourth quarter of last year fell short of expectations, there is a positive outlook that it will narrow its losses this year, including a turnaround to profit in the renewable energy segment. Recently, Hanwha Solutions’ share price climbed to around 50,000 won during intraday trading, marking a new 52-week high.

Reuters Yonhap News Agency

Share price jumps from 20,000-won range to 40,000-won range in one week

Hanwha Solutions’ share price had remained in the 20,000-won range from November last year until just last week. After closing at 28,750 won on November 5 last year, Hanwha Solutions stayed below 30,000 won and finished trading at 28,050 won on the 3rd of this month. However, on the 4th, the share price surged to 36,450 won, up about 30% from the previous day’s closing price, and the upward trend continued, with the stock closing at 47,700 won on the 9th. This represents an increase of about 20,000 won in just one week. The most recent time Hanwha Solutions’ closing price was in the high-40,000-won range was April 2023.

In the fourth quarter of last year, Hanwha Solutions posted sales of 3.7783 trillion won, down 18.6% year-on-year, and recorded an operating loss of 478.2 billion won, swinging to a loss and falling short of the consensus estimate for an operating loss of 142.6 billion won. By segment, the company reported an operating loss of 385.5 billion won in renewable energy (swinging to a loss), an operating loss of 102.1 billion won in chemicals (expanded loss), and an operating loss of 5.4 billion won in advanced materials (swinging to a loss).

The renewable energy segment was affected by lower plant utilization rates and reduced sales volumes due to customs clearance delays in the United States. The chemicals segment was hit by a narrower spread and the impact of regular maintenance, both stemming from scheduled turnarounds and falling prices of key products. The advanced materials segment appears to have been significantly affected by higher labor-related costs.

Even so, brokerages in Yeouido have raised their target prices for this year. Eugene Investment & Securities revised its target price to 50,000 won, a 100% increase from the previous 25,000 won. Shinhan Investment & Securities raised its target to 40,000 won (up 46% from its previous target), Mirae Asset Securities to 46,000 won (up 31.46%), and Hyundai Motor Securities to 47,000 won (up 23.68%).

The reason such positive projections are continuing in the securities industry is the expectation of a recovery in the renewable energy business. Jinmyung Lee, senior research analyst at Shinhan Investment & Securities, said, “From the first quarter, we expect a recovery in the renewable energy business as cell customs clearance issues are resolved and module production normalizes,” adding, “This year, operating profit in the renewable energy segment is projected to reach 381.3 billion won, marking a turnaround to profit.” Lee highlighted that a turnaround is likely to materialize thanks to three factors: the benefit from the United States’ move to de-China its supply chain (FEOC regulations), the vertical integration effect at the Cartersville plant, and spread recovery driven by higher prices for modules (including residential-use modules).

Jinho Lee, research analyst at Mirae Asset Securities, also said, “We are raising our target price based on an upward revision to earnings forecasts, driven by higher average selling prices (ASP) for modules and the confirmation of start-up schedules for new plants.” At Hanwha Solutions’ quarterly earnings presentation on the 5th, Chief Financial Officer Jung Wonyoung said, “In the first quarter, we expect the U.S. module plant to operate normally and sales volumes to increase, and we also anticipate higher selling prices, so we forecast a turnaround to profit in the renewable energy segment,” adding, “In the chemicals segment, we expect the loss to narrow due to base effects from regular maintenance.”

Rising expectations for the space-based solar power industry

One of the key reasons Hanwha Solutions is attracting attention is growing expectations for space-based solar power. Interest has surged since Elon Musk, Chief Executive Officer (CEO) of SpaceX and Tesla, mentioned a space data center powered by solar generation. On the 4th of this month (local time), Chinese media also reported that a Tesla and SpaceX delegation had recently approached solar companies in China.

There is a view that this heightened interest in the solar industry has also influenced the share price of Hanwha Solutions, a domestic solar company. Sunghyun Hwang, research analyst at Eugene Investment & Securities, said of Hanwha Solutions, “The recently spotlighted issue of space AI data centers is clearly a positive factor,” explaining, “As launch costs (1,800 dollars per kilogram) fall, cheaper solar panels will be needed, so in the future, silicon-plus-perovskite tandem cells could emerge as an alternative to the existing high-efficiency, high-cost gallium-based products.” Hwang added, “Hanwha Solutions is also in the process of mass-production validation for this technology, so mid- to long-term expectations are likely to expand.”