[Click eStock] "Hanwha Solutions Reborn as a Solar Power Company... Target Price Up 22%"

NH Investment & Securities Report

[Asia Economy Reporter Minji Lee] NH Investment & Securities maintained its buy rating on Hanwha Solutions on the 14th and raised the target price by 22% from the previous to 71,000 KRW. This adjustment was made due to the increased earnings estimates considering the expansion potential of the renewable energy sector.

Youngkwang Choi, a researcher at NH Investment & Securities, said, “We are raising our operating profit forecasts for this year and next year by 10% and 12%, respectively, compared to previous estimates. Considering that after the passage of the US IRA (Inflation Reduction Act), the US Solar Energy Industries Association and others have raised their US solar installation volume forecasts by 40%, the strong prices of US solar modules are expected to continue.”

NH Investment & Securities projected the company’s Q3 revenue at 3.4508 trillion KRW and operating profit at 260.6 billion KRW, representing growth of 1.8% and 6.9% respectively compared to the previous quarter. Operating profit in the renewable energy sector is expected to increase by 256% quarter-on-quarter to 125.3 billion KRW. This is due to the continued rise in module prices; according to domestic export data, solar module export unit prices rose by 36% in June, 8% in July, and 3% in August. The spread is expected to increase by more than 3 cents quarter-on-quarter due to the sales price increase exceeding the rise in wafer prices.

The chemical sector’s operating profit is expected to decrease by 31% quarter-on-quarter to 158.2 billion KRW. This decline is inevitable due to the weakening spreads of PE and PVC and the drop in caustic soda prices. However, EVA, which is used as a solar module sheet, continues to see strong demand and price strength, and the price of its raw material VAM has fallen, which is expected to improve profitability.

Researcher Youngkwang Choi explained, “The company is transforming its identity into a solar energy company by announcing new expansion plans for EVA resin and sheet related to solar products. Although the official scale and timing of the facilities have not been confirmed, the company plans to establish integrated solar value chain production facilities in the US to fully benefit from the IRA.”

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