Hanwha Corporation received a positive Q2 performance outlook from SK Securities analyst Choi Gwan-soon, who cited growth at major subsidiaries and improved profitability in construction and global divisions. SK Securities maintained a 'Buy' rating while adjusting the target price from 170,000 won to 130,000 won. The analysis comes as uncertainties surrounding Hanwha's upcoming corporate split on August 1 and participation in Hanwha Solutions' rights offering are being resolved, with the analyst expecting share price recovery following the split relisting. The Korean conglomerate's valuation discount relative to net asset value currently stands at 64.1%, presenting potential upside as corporate restructuring uncertainties dissipate.
SK Securities Projects Q2 Revenue Growth to 21.8 Trillion Won
SK Securities forecast Hanwha's Q2 consolidated revenue at 21.8 trillion won, representing a 13.5% increase compared to the same period last year. Operating profit is projected to reach 1.5048 trillion won, up 12.7% year-over-year, with an estimated operating margin of 6.9%. The performance improvement is expected to be driven by major subsidiaries, with Hanwha Aerospace and Hanwha Solutions anticipated to post revenue increases of 18.4% and 46.1% respectively compared to the prior-year quarter. Profitability improvements in the construction and global divisions are also expected to contribute to the overall results.
Hanwha Schedules Corporate Split for August 1 with 0.756:0.244 Ratio
Hanwha's corporate split is scheduled for August 1, with the existing entity receiving a 0.756 allocation ratio and the new entity 0.244. The existing entity will include construction and global operations, Hanwha Aerospace, Hanwha Solutions, and Hanwha Life Insurance. The new entity will comprise Hanwha Vision, Hanwha Momentum, Hanwha Robotics, Hanwha Galleria, Hanwha Hotels & Resorts, and Ourhome. Trading will be suspended from July 30 through August 24, with relisting scheduled for August 25. SK Securities views the split positively for enabling business-specific strategy optimization and potential market revaluation.
Hanwha Solutions Rights Offering Set at 22,100 Won Per Share
The terms for Hanwha Solutions' rights offering have been finalized, with the issue price set at 22,100 won per share and 53 million new shares to be issued. Hanwha Corporation plans to participate in the offering with approximately 410 billion won. SK Securities noted that the confirmation of rights offering conditions is gradually resolving related uncertainties that had contributed to Hanwha's valuation discount.
Analyst Cites 64.1% NAV Discount as Valuation Opportunity
Analyst Choi Gwan-soon stated that Hanwha's 64.1% discount to net asset value presents attractive valuation, noting that the discount rate is higher than other holding companies due to persistent uncertainties related to the corporate split and rights offering participation. The analyst expects share price recovery as these uncertainties are resolved. While the target price was lowered from 170,000 won to 130,000 won to reflect declines in subsidiary share prices and corresponding NAV reduction, the analyst indicated high share price attractiveness due to the likelihood of increased combined market capitalization following the split relisting. The firm continues to project performance improvement beyond the second half, citing Hanwha Solutions' turnaround and the resumption of Iraq's Bismayah construction project in 2027 as contributing factors.
FAQ
What is SK Securities' Q2 revenue forecast for Hanwha Corporation?
SK Securities projects Hanwha's Q2 consolidated revenue at 21.8 trillion won, representing a 13.5% increase compared to the same period last year, with operating profit forecast at 1.5048 trillion won.
When is Hanwha's corporate split scheduled and what is the split ratio?
Hanwha's corporate split is scheduled for August 1, with a split ratio of 0.756 for the existing entity and 0.244 for the new entity. Trading will be suspended from July 30 through August 24, with relisting on August 25.
What are the terms of Hanwha Solutions' rights offering?
Hanwha Solutions' rights offering has been set at an issue price of 22,100 won per share with 53 million new shares to be issued, and Hanwha Corporation plans to participate with approximately 410 billion won.
