[Click eStock] "Hanwha, High Stock Attractiveness... Target Price Maintained"

On the 5th, SK Securities maintained a buy rating and a target price of 39,000 KRW for Hanwha, stating that "although the separate profit and loss for the second quarter of this year was sluggish, the stock's attractiveness remains high." The closing price on the previous trading day was 30,400 KRW.

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On the same day, Kwansoon Choi, a researcher at SK Securities, said, "Despite the sluggish separate profit and loss in the second quarter, Hanwha's current stock price is trading at a 69.4% discount to its Net Asset Value (NAV) and a Price-to-Book Ratio (PBR) of 0.29 times for this year, indicating high valuation attractiveness," adding, "There is a high possibility of dividend expansion due to increased dividend income and brand license sales."

Looking at the separate performance for the second quarter, sales recorded 1.5565 trillion KRW, down 13.8% compared to the same period last year. Operating loss was 21.7 billion KRW (turning to a deficit). Operating profit improved in the global division as the proportion of explosives sales increased, and the operating deficit narrowed in the momentum division due to increased sales of secondary batteries and solar equipment. On the other hand, the construction division turned to a loss (-58.8 billion KRW) due to an increase in estimated completion costs.

Researcher Choi said, "Although the construction sector is expected to continue facing a downturn, we anticipate a gradual reduction in operating losses through profitability-focused orders," and added, "In the global division, commercial production of 400,000 tons of nitric acid is scheduled to begin early next year, which is expected to add more than 100 billion KRW in annual sales." Although consolidated results have not yet been announced, considering the performance improvement of Hanwha Aerospace, the operating profit forecast (331.4 billion KRW) is generally expected to be met.

Expectations for dividend expansion and financial structure improvement are noteworthy. Researcher Choi forecasted, "Dividends are likely to be determined based on dividend income and brand license sales, and with the full reflection of Hanwha Ocean and the resumption of dividends from Hanwha Life, this amount is expected to increase by 84.7 billion KRW this year compared to the previous year (last year's total dividends were 73.7 billion KRW)."

He added, "With the ongoing promotion of low-rate separate taxation on dividend income for shareholders in the event of dividend expansion, stock price appreciation can be expected," and "Additionally, cash inflow of 439.5 billion KRW is scheduled within the year due to subsidiary sales. Expectations for financial structure improvement in the second half remain valid."

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