April 27, 2024

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[THE INVESTOR] Hanon Systems has great potential as demand for electric vehicles expands, said Korea Investment and Securities on Oct. 2, suggesting a “buy” recommendation and 17,000 won (US$15.24) target price. 

Its stocks have been trading at 15 to 22 times its price earnings ratio over the past 5 years and considering that the growth of EV market is further expanding, it is not pushing it too far to set the target price at 20 times its PER. Its major clients are Hyundai Motor, Kia Motors and Ford but from the second quarter in particular, revenue from new clients including Volkswagen, Fiat Chrysler and BMW has been surging, said analyst Kim Jin-woo.

Having acquired fluid pressure and controls business from Magna, the world’s third-largest auto parts maker, its client base will expand further. Although the acquisition will increase interest costs to 60 billion won per year from 20 billion won, it will be offset by gain in operating profit and the firm’s solid financial health, the analyst underlined.

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