[Click eStock] "Hanwha Solutions, Earnings Significantly Below Expectations"

by Hwang Yoonju

Published 14 Feb.2024 09:12(KST)

[Image source=Yonhap News]

Ebest Investment & Securities pointed out on the 14th that Hanwha Solutions' fourth-quarter earnings significantly fell short of market expectations. The investment opinion 'Buy' and the target price of 47,000 KRW were maintained.

Researcher Lee Ju-young of Ebest Investment & Securities stated, "Last year's fourth-quarter sales recorded 3.8697 trillion KRW, a 32.3% increase compared to the previous quarter, while operating profit sharply declined by 58.6% to 40.7 billion KRW," adding, "There was a significant gap between guidance and actual performance in the fourth quarter, following the second quarter of last year."

The researcher pointed out, "For valuation recovery, the performance of the power generation business, which can compensate for the poor results in the chemical sector and the weakening profitability of modules, must be predictable."

The fortunate aspect is that a favorable environment in the United States may continue. Starting in June, the U.S. plans to impose anti-dumping duties on modules using Chinese components imported from four Southeast Asian countries (Cambodia, Malaysia, Thailand, Vietnam) to regulate indirect exports. Modules imported during the grace period must be used within six months from the end of the grace period.

Despite the earnings falling significantly below expectations, the target price was maintained due to the judgment that the stock's attractiveness is high relative to its valuation. The researcher analyzed, "With restrictions on indirect exports through Southeast Asia, it is expected to be easier to defend selling prices," but added, "However, caution is needed as direct entry of Chinese companies into the U.S. market has been confirmed."

He continued, "Hanwha Solutions is absolutely dependent on the U.S. market," and added, "If Chinese companies continue to enter, the module business is expected to inevitably suffer damage."