[Click eStock] Hanwha Solutions, Poly Decline + Coal Shortage + US Tax Benefits

[Asia Economy Reporter Lee Seon-ae] On the 10th, Hanwha Investment & Securities maintained a buy rating and a target price of 61,000 KRW for Hanwha Solutions. They also mentioned the possibility of it being a top pick among major refining and chemical stocks this year.

Jeon Woo-je, a researcher at Hanwha Investment & Securities, stated, "Among the stocks with a market capitalization of over 5 trillion KRW (6 stocks), Hanwha Solutions is expected to have the highest operating profit growth (+30%) among the two stocks forecasted to increase earnings." He added, "Furthermore, the improvement in earnings is driven by the high valuation of solar power profit improvement, which is positive for the stock price. Additionally, if the SEMA (Solar Energy Manufacturing Act), a key pledge of the Biden administration, passes, subsidies and expansion benefits exceeding 1 to 3 trillion KRW over the next 10 years are expected."

The main cause of solar power losses in 2021 was the increase in costs due to polysilicon shortages and decreased demand. However, polysilicon prices have been adjusting from late October (36 USD) to early January (30 USD).

The decline in profits in the chemical sector is expected to be limited. In the case of caustic soda, domestic prices were raised in November (for dye companies, etc.), and since prices are usually maintained for one year, an increase in earnings in 2022 is highly likely. For PVC, amid ongoing coal phase-out movements, Indonesia (China's top coal importer) banned coal exports in January, which is expected to disrupt operations of Chinese (coal-based) PVC companies.

Tax benefits in the United States are also anticipated. Although delayed due to some opposition, the passage of Biden's SEMA bill is expected. The U.S. solar module production capacity in 2022 (7.5 GW) is significantly insufficient compared to the installation target (30 GW), so tax incentives will be provided to encourage domestic production of polysilicon, wafers, cells, and modules. Upon passage, Hanwha Solutions is expected to receive cumulative tax benefits exceeding 1 trillion KRW by 2030. Assuming a maintained market share of 23% and some expansion for vertical integration, subsidies of up to 3 to 4 trillion KRW can also be anticipated.

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