[Click eStock] "Hanwha Ocean, 2 Trillion Won Capital Increase Dilution Effect... Investment Rating ↓"

Difficulty Reflecting Valuation of Super-Gap Defense Facility Investments
Investment in US and European Bases...Expecting Competitiveness in the Warship Market

Daol Investment & Securities evaluated that Hanwha Ocean's stockholders would be somewhat disadvantaged due to the dilution effect on the stock price after completing a 2 trillion won rights offering on the 24th. Accordingly, the investment rating was downgraded to 'Hold' while maintaining the target price at 30,000 won.

Choi Kwang-sik, a researcher at Daol Investment & Securities, stated, "Hanwha Ocean's decision to proceed with a 2 trillion won rights offering means that capital expansion of 4 trillion won will be achieved in 2023 alone," adding, "At the current stock price, the market capitalization is effectively 10.8 trillion won, which is larger than HD Hyundai Heavy Industries."

Hanwha Ocean's second rights offering this year is intended for investment purposes. The funds from the rights offering will be allocated to ultra-gap defense with 900 billion won, eco-friendly and digital sectors with 600 billion won, offshore wind power with 200 billion won, and smart yard with 300 billion won.

Accordingly, capital in the second quarter of this year will increase from 2.3 trillion won to 4.3 trillion won. The number of shares is expected to increase by 41%, from 217 million shares to 306 million shares.

Researcher Choi explained, "The earnings per share (EPS) for 2025 will decrease by 29%, from the existing 2,245 won to 1,589 won, leading to a decline in per-share value," and added, "Although the appropriate market capitalization of Hanwha Ocean based on a price-earnings ratio (PER) of 16 times for controlling shareholder net income from 2025 to 2026 is revised upward from the previous 8.1 trillion won to 9.2 trillion won, the target price is maintained at 30,000 won due to dilution factors."

Researcher Choi also noted, "Investments in surface ships and submarine facilities within the ultra-gap defense sector will begin to show capacity expansion effects from 2029, making it difficult to reflect in valuation," but forecasted, "However, with 500 billion won allocated for production base investments in the U.S. and Europe, competitiveness is expected in the 325 trillion won naval ship market over the next decade."

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