Hanjung NS, Challenging Adaptation to the KOSDAQ Market

Hanjung NS, once considered a promising stock in the KONEX market, has been struggling since its transfer listing to the KOSDAQ market on June 24 this year. The stock price has been declining continuously since the transfer listing. Although market experts have highly evaluated its energy storage system (ESS) technology and issued optimistic forecasts, no meaningful rebound trend has yet been observed.

According to the financial investment industry on the 3rd, Hanjung NS's stock price fell 54.8% five months after the transfer listing. Considering that the KOSDAQ index dropped 19.7% during the same period, the market-relative return was a disappointing -35.1 percentage points (P).

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Since Hanjung NS transferred its listing to the KOSDAQ market, individual investors have accumulated net purchases worth 40.8 billion KRW, but they are currently facing an unrealized loss rate of 55%.

Founded in 1995, Hanjung NS is a company that develops ESS and electric vehicle (EV) components. It has expanded its business centered on water-cooled ESS cooling systems. Based on its experience as the first in Korea to commercialize a water-cooled ESS cooling system, it is developing next-generation products. It mass-produces key components of the water-cooled cooling system, such as chillers, cooling plates, and heating, ventilation, and air conditioning (HVAC) systems, which it supplies to Samsung SDI.

Before and after the transfer listing, domestic securities firms’ research centers competed to publish positive analysis reports. Between May and June this year, notable report titles on Hanjung NS included ▲“A Star New Player Worth Noticing” (SK Securities), ▲“A Company to Watch in an Era Where Water Becomes Important” (NH Investment & Securities), ▲“A Proper BESS-Related Stock Has Emerged” (Yuanta Securities), and ▲“Try to Follow If You Can” (Korea Investment & Securities).

During the two-day subscription period for general investors from June 10 to 11, approximately 6.0048 trillion KRW in subscription deposits were gathered. This reflects the expectation of a stock price rise following Hanjung NS’s entry into the KOSDAQ market.

However, the stock price fell short of expectations. Although it briefly rose to 61,800 KRW intraday on July 11, it traded sideways for about three months before sharply declining over the recent two months.

Concerns over the policies of then U.S. President-elect Donald Trump and poor earnings performance were cited as causes for the stock price decline. With the inauguration of the Trump administration, worries arose about a downturn in the renewable energy industry and contraction of the ESS sector. The new government’s emphasis on reviving the fossil fuel industry had an impact, dampening investment sentiment toward ESS-related stocks.

Hanjung NS recorded cumulative sales of 121.9 billion KRW and operating profit of 3.7 billion KRW through the third quarter of this year. Sales increased by 38.2% year-on-year, and operating profit turned positive. Although performance improved compared to the previous year, it differs from the projections presented in the prospectus submitted for listing. The company estimated achieving sales of 187 billion KRW and operating profit of 14 billion KRW this year. To meet these projections, it must record an operating profit exceeding 10 billion KRW in the fourth quarter.

Shinhan Investment Corp. estimated that Hanjung NS would achieve sales of 194.1 billion KRW and operating profit of 11.5 billion KRW this year. While expecting a large-scale turnaround to profitability, it predicted the company would not meet the targets set in the prospectus.

Market experts believe profits will increase rapidly despite uncertainties in U.S. policies. Min-ki Choi, a researcher at Shinhan Investment Corp., said, “In the currently dominant lithium-ion battery-based BESS, the adoption rate of water-cooled cooling systems is increasing instead of the existing air-cooled systems,” and forecasted, “Operating profit will reach 23.9 billion KRW next year.”

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