May 08, 2024

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[THE INVESTOR] Hanhwa will be boosted by the improved earnings of its subsidiaries this year, said Shinhan Financial Investment on Feb. 24, maintaining a “buy” recommendation and 47,000 won (US$41.50) target price. 

Hanwha has broadly missed the market estimate with 155.8 billion won operating profit in the fourth quarter last year, dragged down by the loss from Hanwha Chemical’s solar division and Hanwha Life Insurance’s additional accumulation of cash reserve, explained analyst Im Heui-yeon. 

Its own manufacturing and trade business was in line with the analysts’ expectations and the fact that Hanwha Engineering and Construction has turned to black after three years is a positive, said the analyst. 

The private construction company will contribute to the group’s earnings improvement as its risks overseas will start to ease significantly, according to Im. “The compensation for delayed construction in Saudi is estimated at 72 billion won, 70 percent lower than the original assessment, and it will collect payment for the Iraqi project as well,” said the analyst.

Other major subsidiaries, including Hanwha Chemical which will gain from the main product price hike, are expected to post stronger growth, added the analyst. 

By Hwang You-mee (glamazon@heraldcorp.com)