[Click eStock] Hanwha Solutions, Strong Q1 Performance Despite Off-Season

NH Investment & Securities maintained its buy rating and target price of 71,000 KRW for Hanwha Solutions on the 3rd.

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The company's expected revenue for the first quarter is 3.1 trillion KRW, with an operating profit of 210 billion KRW. Operating profit is estimated to increase by 15% compared to the previous quarter. Among these, the Chemical division is expected to turn profitable compared to the previous quarter, with revenue of 1.3 trillion KRW and operating profit of 27.3 billion KRW. Youngkwang Choi, a researcher at NH Investment & Securities, stated, “We expect a turnaround to profit due to the elimination of one-time costs such as opportunity loss of 20 billion KRW from regular maintenance in the previous quarter and performance bonuses of 40 billion KRW,” adding, “The weak price of caustic soda likely resulted in low profit margins.”

The renewable energy division is expected to record revenue of 1.3 trillion KRW and operating profit of 179.1 billion KRW, down 35.7% and 22.8% respectively from the previous quarter. This is attributed to a decrease in sales volume due to the first quarter being an off-season. Although module prices in Europe and China showed weakness in the first quarter, Hanwha Solutions’ average selling price is expected to remain similar to the previous quarter. Operating profit for the module business division is estimated at 167.1 billion KRW, and for the downstream business division at 12 billion KRW.

A notable aspect is the growth strategy for the solar power business centered on the United States. Price volatility for solar upstream products expanded in the first quarter, and module prices in Europe and China are expected to gradually decline. This is because global polysilicon production capacity is projected to increase from 294 GW at the end of last year to over 500 GW by the end of this year, leading to a downward price stabilization focused on upstream products.

However, module prices in the U.S. remain robust. Hanwha Solutions plans to increase its sales proportion targeting the U.S. from 40-50% last year to 70% by 2025, so the average selling price is expected to remain relatively strong. Module production capacity in the U.S. is being expanded from 1.7 GW last year to 3.1 GW in 2023 and 8.4 GW in 2024. Researcher Choi said, “IRA tax benefits for 2023 production volume are about 180 billion KRW and are expected to increase to about 1 trillion KRW by 2026,” adding, “However, the 1.4 GW module expansion this year will go through an initial ramp-up period, and sales volume will start to increase from next year.”

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