Hanwha, Construction Performance Improvement as Stock Price Surge Trigger

[Asia Economy Reporter Park Jihwan] SK Securities evaluated on the 1st that the rise in Hanwha's stock price depends on the improvement of performance in the construction sector. They presented a 'Buy' investment opinion and a target price of 41,000 KRW.

Choi Gwansoon, a researcher at SK Securities, said, "Last year's fourth-quarter performance was significantly improved in operating profit compared to the same period last year due to increased sales of Hanwha Solutions and Hanwha Aerospace, improvement in product portfolio, and increased interest income from Hanwha Life Insurance due to rising interest rates."

Although Hanwha Construction showed sluggishness in the fourth quarter of last year due to deferred pre-sale volume, high growth is expected this year based on secured orders. It is analyzed that the performance improvement of Hanwha Construction, a non-listed company, will act as a trigger to raise the stock price of the holding company Hanwha.

The cause of Hanwha Construction's fourth-quarter performance slump, about 2,000 housing units, was deferred from the fourth quarter to the first quarter of this year. With about 7,000 housing units scheduled for pre-sale in the first half of the year, Hanwha Construction's growth potential is expected to be highlighted this year. Hanwha Construction's sales and operating profit this year are expected to rise by 61.4% and 170.5% year-on-year to 4.2504 trillion KRW and 320.3 billion KRW, respectively.

Currently, Hanwha Construction's book value is only 1.2587 trillion KRW, so it is expected that the performance improvement of Hanwha Construction, a non-listed company, will lead to an increase in Hanwha's net asset value (NAV) and stock price rise. Researcher Choi Gwansoon stated, "Stable growth of Hanwha Construction based on secured orders will drive Hanwha's stock price increase," adding, "Hanwha's current stock price is 61.2% of NAV, indicating high valuation attractiveness."

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