Alphabiz - Hana Securities: ＂Hanon Systems′ Share Dilution Lowers Target Price＂

Hanon system. (photo = Hanon system)

[Alpha Biz= Reporter Kim Sangjin] On the 14th, Hana Securities lowered its target price for Hanon Systems from 5,000 won to 4,600 won, citing a 27% increase in share count, which has diluted per-share value. The firm maintained a "Neutral" rating.

Hanon Systems reported consolidated Q3 sales of 2.5 trillion won, an 8.2% increase year-on-year, and an operating profit of 93.7 billion won, up 391.1%.

Hana Securities noted, "While Q3 results exceeded expectations, without customer cost recovery, performance met market expectations." They added, "Despite gradual improvements, the pace and scale of this growth are insufficient to justify further gains at the current P/E ratio of 13x."

Hana Securities explained that a rights issue (27.2% increase in share count, base price of 4,139 won) and a major shareholder transition are underway, aiming to raise 600 billion won (400 billion won for operations, 200 billion won for debt repayment). Nevertheless, the debt ratio remains high at around 220%, with annual interest costs of 200 billion won.

They continued, "The strategic impact of the major shareholder change will take time, and offsetting share dilution and increasing per-share value will require patience." Hana Securities expects the shareholder transition, including the sale of existing shares and new share issuance, to be completed this year following approvals from foreign governments. The rights issue will also contribute 200 billion won to debt repayment, potentially reducing interest expenses next year.

Alphabiz Reporter Kim SangJin(letyou@alphabiz.co.kr)