[Click eStock] Undervalued Dividend Stock, but Disappointing Earnings for Hansol Paper

Heungkuk Securities has lowered its target price for Hansol Paper, a comprehensive paper manufacturing company, from 11,000 won to 9,500 won. The investment rating remains a buy.

On May 19, Park Jongryeol, a researcher at Heungkuk Securities, stated, "We have revised down the target price as earnings for this year and next year are expected to decline." However, he added, "The company's forward 12-month price-to-earnings ratio (PER) and price-to-book ratio (PBR) are 4.9x and 0.2x, respectively, indicating undervaluation, and its attractiveness as a dividend stock is fairly strong."

For the first quarter of this year, consolidated sales fell 2.8% year-on-year to 559.8 billion won, while operating profit plunged 44.9% to 11.2 billion won, reflecting weak performance. Park explained, "For printing paper, the domestic business turned to a loss; for industrial paper, domestic profitability weakened and the export business also turned to a loss; for specialty paper, higher maritime freight costs in exports and intensified competition had a significant negative impact on profitability."

However, Park noted, "Hansol Paper is responding to rising costs of key raw materials such as pulp and higher logistics expenses caused by the prolonged U.S.-Iran war by raising its product sales prices. As global competitors are also raising prices, sales price hikes are expected to proceed smoothly." He continued, "Operating profit in the printing paper segment will gradually increase; for specialty paper, the company is responding to the price increases by U.S. local firms and plans to raise prices in markets outside the U.S.; for industrial paper, profitability can improve through price hikes in the Southeast Asian market."

Park also commented, "In May, the Fair Trade Commission decided to impose a fine of 140 billion won for collusion in domestic sales prices of printing paper, but the final penalty amount may be subject to change."

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