[Click eStock] "Hanon Systems, Share Sale Process Underway"

IBK Investment & Securities "Target Price Raised from 16,000 KRW to 19,000 KRW"
Expecting Earnings Recovery Due to COVID-19 Base Effect

[Asia Economy Reporter Gong Byung-sun] Hanon Systems has entered the process of selling its shares. This year, Hanon Systems' performance is expected to show a high growth rate due to the base effect from COVID-19. Accordingly, IBK Investment & Securities has raised the target price for Hanon Systems from 16,000 KRW to 19,000 KRW, maintaining a 'Buy' investment rating.

On the 28th, according to IBK Investment & Securities, a preliminary bidding process is underway regarding the sale of Hanon Systems' shares. Due to the nature of private equity funds, this share sale is expected to include not only the shares held by Hahn & Company but also those held by Hankook Tire. Hankook Tire is reportedly considering a tag-along right rather than a right of first refusal.

Investment prospectuses have been sent to acquisition candidates interested in purchasing Hanon Systems, and preliminary bids are expected by the end of June. The companies mentioned as potential bidders include ▲ LG Group and Carlyle private equity fund ▲ SK Group ▲ Continental, among others. Lee Sang-hyun, a researcher at IBK Investment & Securities, said, "Hanon Systems is one of the top three companies capable of supplying efficient thermal management systems for electric vehicles, which will attract significant market interest. However, since the market capitalization is already large, the acquisition price may vary depending on whether there is a volume guarantee from the supply destinations that serve as the basis for price calculation."

This year, performance is expected to improve significantly due to the COVID-19 base effect. The researcher explained, "Double-digit high growth rates are expected in sales and operating profit. However, in sales, there is a variable of some production disruptions due to semiconductor supply shortages for vehicles from automakers, and in operating profit, increased transportation costs due to rising ocean freight rates will act as a variable."

Currently, Hanon Systems holds an order backlog equivalent to six years of volume. As of the end of the first quarter this year, the order backlog for new orders was $12.1 billion (approximately 13.5157 trillion KRW), a 10% increase compared to the previous year. The total order backlog is $41 billion, roughly six years' worth of volume. The proportion of eco-friendly vehicles (xEV) in the total order backlog is 40%, and among the new orders' backlog, xEV accounts for 75%, indicating a high proportion of eco-friendly related supply.

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