[Click eStock] "Hallaholdings, Q2 Earnings Expected to Decline...Target Price Down 25%"

[Asia Economy Reporter Park Jihwan] Hana Financial Investment analyzed on the 19th that Hanla Holdings' first-quarter performance was relatively favorable due to the strong performance in the construction sector, but from the second quarter onward, the performance of its own business and subsidiaries is expected to decline. Accordingly, the investment opinion to buy was maintained, but the target stock price was lowered by 24.56% from the previous 57,000 KRW to 43,000 KRW.

Song Seonjae, a researcher at Hana Financial Investment, stated, "The first-quarter performance was relatively favorable due to the strong performance in the construction sector," adding, "However, from the second quarter onward, the automobile sector is expected to perform poorly, leading to weak earnings from its own business and equity-method profits from Mando and Mando Hella."

The first-quarter results were evaluated to have exceeded market expectations. Hanla Holdings' first-quarter sales recorded 179.5 billion KRW, down 8% compared to the same period last year. However, operating profit increased by 3% to 17.3 billion KRW.

Researcher Song explained, "Due to the impact of COVID-19, logistics sales to affiliates decreased, and the reduction of low-profit segments continued," adding, "Profitability improved due to the decreased proportion of low-profit segments."

55% of Hanla Holdings' total corporate value is attributed to equity/royalty value in Mando, and the equity value in Mando Hella accounts for an 8% share.

Researcher Song said, "Mando (holding 30.25% equity) is expected to have poor performance in the first half due to the global spread of COVID-19, temporary suspension of production by automakers, and the reflection of one-time costs," and added, "From the second half onward, performance is expected to improve with the resumption of automakers' production and internal growth drivers (high growth in ADAS and supply to California electric vehicle companies)."

He evaluated, "Mando Hella's profitability declined due to weakness in China and price pressure in the mid-to-low-end segments."

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