[Click eStock] Hanwha Solutions Enters Deficit Reduction Phase "Time to Regain Interest"

[Asia Economy Reporter Lee Seon-ae] Hanwha Solutions' stock price has continued to show a sluggish trend since the second quarter due to a lack of momentum in the solar power sector and a downturn in the chemical market, but investment advice suggests that it is now a time to pay attention again.

According to Hi Investment & Securities on the 10th, the structural improvement in the market for PVC, a key product in the chemical division, provides stronger profit defense compared to pure chemical companies. Additionally, the solar power sector is expected to see a reduction in losses from the third quarter due to eased cost burdens following stable wafer prices. Based on this, the firm maintains a buy rating and a target price of 63,000 KRW.

Cost competitiveness of coal (methanol)-based facilities in China is expected to weaken, leading to supply adjustments, with PVC being one of the representative products affected. In particular, about 70% of global PVC demand is used in the construction sector, and demand is expected to increase alongside expanded infrastructure investments as part of economic stimulus measures in major countries.

Despite new wafer capacity additions in 2021, the tight supply of polysilicon meant that the expansion effect was almost negligible. As a result, wafer prices rose sharply in the first half of the year, damaging the profitability of cell/module companies like Hanwha Solutions. However, prices have remained stable since August, so cost burdens are expected to ease in the third quarter. Especially with the planned polysilicon capacity expansion by the end of the year, supply conditions are expected to improve further, and wafer manufacturers’ operating rates are likely to be revised upward. This will positively impact costs and lead to an improvement in the module-wafer spread, projecting a quarterly reduction in solar power losses starting from the third quarter.

Jeon Yoo-jin, a researcher at Hi Investment & Securities, emphasized, "The chemical division has stronger profit defense compared to pure chemical companies, and the solar power sector has entered a phase of gradually reducing losses," adding, "It is a time when renewed interest in the company is needed in many ways."

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