Foreigners Selling Heavily, Hanon Systems 25 Consecutive Days of Net Buying... Why?

[Asia Economy Reporter Song Hwajeong] Amid record-breaking net selling by foreigners in the domestic stock market, interest is focused on the fact that foreigners have continued net buying of Hanon Systems for 25 consecutive days.

According to the Korea Exchange on the 11th, foreigners have net bought Hanon Systems for 25 consecutive trading days from the 5th of last month to the day before. The net buying amount is 51 billion KRW. During the same period, foreigners net sold 8.2269 trillion KRW in the domestic stock market. Due to the sustained buying trend, the foreign ownership ratio of Hanon Systems rose from 19.44% on the 4th of last month to 19.97%. During this period, Hanon Systems' stock price rose by 0.96%, outperforming the KOSPI, which fell by 9.79% over the same period.

The influx of foreign buying interest in Hanon Systems is interpreted as being due to the benefits from electric vehicles. Previously, when electric vehicle-related stocks rose, Hanon Systems was neglected, and buying interest flowed in belatedly. Jinwoo Kim, a researcher at Korea Investment & Securities, said, "Hanon Systems has secured most of the platforms for major electric vehicle manufacturers, but it was neglected in the recent electric vehicle-related stock rally," adding, "As valuation recovers in line with the electric vehicle era, the stock price will break out from the lower end of the existing band (11,000 KRW to 14,500 KRW)."

Hanon Systems' fourth-quarter performance last year exceeded market expectations. Hanon Systems recorded sales of 1.9611 trillion KRW and operating profit of 171.1 billion KRW in the fourth quarter. These figures represent increases of 22% and 10%, respectively, compared to the same period last year.

This year, electric vehicle-related sales are expected to grow significantly. Pyeongmo Kim, a researcher at DB Financial Investment, said, "Although short-term uncertainties have increased due to the novel coronavirus (COVID-19), the volume of Hanon Systems' major customers in China is expected to grow by 3-5% compared to last year," adding, "In addition to Tesla, the production of electric vehicles by Hyundai and Kia is also expected to more than double this year compared to last year, which will improve the performance of the domestic corporation." DB Financial Investment forecasted that Hanon Systems' operating profit this year will increase by 15% from the previous year to 550.1 billion KRW, exceeding the consensus estimate of 532.7 billion KRW.

Seonjae Song, a researcher at Hana Financial Investment, emphasized, "From the second half of this year, attention should be paid to the fact that growth potential will increase mainly in eco-friendly car parts, supported by the delivery of Volkswagen electric compressors and Hyundai-Kia's response to the electric vehicle-only platform (E-GMP)."

This content was produced with the assistance of AI translation services.