[Click eStock] Hanwha, Steady Earnings and Moves to Strengthen Control

[Asia Economy Reporter Lee Seon-ae] Daishin Securities announced on the 4th that it maintains a buy rating and a target price of 45,000 KRW for Hanwha, expecting steady performance and strengthened control.

Hanwha's Q3 2021 results met both the company's and market expectations. Consolidated sales reached 13.4168 trillion KRW (+14.9% yoy), operating profit was 573.2 billion KRW (-9.9% yoy), and net income attributable to controlling shareholders was 232.5 billion KRW (+42.5% yoy). On a separate basis, sales were 824.4 billion KRW (-12.9% yoy) and operating profit was 69.9 billion KRW (-1.8% yoy).

The turnaround in the proprietary business division and the performance of non-financial affiliates were as expected, but the financial affiliates' results were somewhat weak. For financial affiliates, insurance operating income and investment income were favorable, but performance was somewhat sluggish due to the impact of variable insurance reserves allocation amid a weak stock market.

In Q3 2020, there was a reversal effect of approximately 65 billion KRW in variable insurance reserves due to a booming stock market, but this quarter saw an allocation of about 13.2 billion KRW.

Hanwha Construction continues to experience weak performance as overseas sales declined due to the suspension of construction at the Iraq site. Recovery is expected in Q4 with increased sales from domestic housing construction and sales projects, but the timing for resuming construction at the Iraq site remains undecided.

Yang Ji-hwan, a researcher at Daishin Securities, explained, "Hanwha Energy has decided to additionally purchase about 1,777,000 shares (2.37%), and other related parties are also increasing some of their shares. Although the reason for the share purchase is unclear, it can be interpreted as an effort to strengthen control."

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