[Click eStock] "Hanwha, Stable Defense Business with Growth Potential in Solar Power and Hydrogen Vehicles... Target Price Up"

[Asia Economy Reporter Oh Ju-yeon] NH Investment & Securities evaluated Hanwha on the 14th, stating that despite the impact of the novel coronavirus disease (COVID-19), the visibility of its performance is favorable due to the contribution of stable defense businesses such as its own defense sector and Hanwha Aerospace.

They also expect the renewable energy business opportunities to expand from solar power to hydrogen vehicles, maintaining a 'Buy' investment rating and raising the target price from the previous 27,000 KRW to 32,000 KRW.

Hanwha's sales and operating profit in the second quarter of this year were 11.0041 trillion KRW and 501.3 billion KRW respectively, significantly exceeding market consensus. While sales decreased by 14% compared to the same period last year, operating profit increased by 38%.

The largest factor was the reversal of 160 billion KRW in variable guarantee reserves of Hanwha Life Insurance due to the stock market rebound, but overall, the affiliates delivered better-than-expected strong performance.

Separate operating profit showed strength due to the base effect in the defense sector despite continued losses in the trade division. Hanwha Construction exceeded an operating profit margin of 10% for the first time in eight quarters, reflecting settlements of domestic and overseas completed projects despite delays in the Iraq housing project.

Researcher Kim Dong-yang forecasted, "In the third quarter, although there are concerns about delays in Hanwha Construction's Iraq housing project, we expect a slight improvement (3%) in operating profit to 398.5 billion KRW compared to the same period last year due to recovery in the trade division, base effects in the defense sector, and the possibility of additional reversal of variable guarantee reserves by Hanwha Life Insurance."

He added, "We anticipate an expansion in the contribution of renewable energy, including improved profitability in Hanwha Solutions' solar power business, Hanwha Energy and Hanwha General Chemical's equity investment in Nikola, and potential opportunities in hydrogen power generation for transportation through H Solution, an affiliate."

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