SK Securities has projected that Hanwha's corporate value discount rate will decrease due to expectations of optimized business portfolio and resource allocation following its demerger. The firm has raised its target price to 170,000 won while maintaining a 'buy' rating.
In a report released on September 16, analyst Choi Kwan-soo stated, "If additional shareholder returns become visible as a result of the demerger, we can expect a significant normalization of the discount rate compared to competitors."
Choi noted that Hanwha decided to split into two entities, Hanwha and the newly established Hanwha Machinery and Service Holdings, at a ratio of 0.756 to 0.244 on January 14. He explained that the market capitalization before the split was 5.9 trillion won, and after the re-listing, the combined market capitalization increased to 7.9 trillion won, marking a 33.9% rise.
He added, "The increase in combined market capitalization appears to be driven by expectations of optimized business portfolio and resource allocation. Currently, the discount rate compared to the net asset value (NAV) of the surviving entity is 65.3%, slightly reduced from the pre-split rate of 66.1%."
Future performance improvements are also seen as a factor for corporate value reassessment. Choi highlighted that the aerospace sector is strengthening its export competitiveness, having signed a 410 million euro export contract with Croatia. He also noted that the solutions sector is expected to benefit from the operation of a solar plant in the U.S. following a capital increase and the potential rise in demand for renewable energy after the midterm elections.
Additionally, he mentioned that the possibility of resuming construction in Bismayah, Iraq, which has faced delays, is increasing as recent meetings with the head of the Iraqi Investment Commission have taken place. He anticipates that improvements in subsidiary performance will also enhance cash flow through trademark revenues and dividends.
* This article has been translated by AI.
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