Hanwha will improve in 2019 after last year’s sluggish earnings and its undervalued stocks will be attractive, said Mirae Asset Daewoo on Feb. 27 maintaining a “buy” recommendation and 45,000 won (US$40.25) target price.
Its revenue in the fourth quarter last year fell 7.11 percent on-year to 12.98 trillion won and operating loss came in at 13.5 billion won. Operating loss of major subsidiaries including Hanwha Life Insurance and Hanwha Chemical were the main reason for slow earnings. Its own business has grown significantly in size but one-off costs have undermined its profits, said analyst Cheong Dae-ro.
This year, its subsidiaries will recover. Solar energy sector, in particular, will gain considerably as US tariff declines and a new factory begins operations. Its machinery sector, however, will shrink 28 percent in size from last year since it has transferred aero and machinery divisions to Hanwha Aerospace and Hanwha Precision Machinery. Its stock price is gravely undervalued trading at 4.3 times its price-earnings ratio. The value of its stake in subsidiaries will not decline much further and its construction arm continues to show improvements, so its stocks will be reevaluated this year, he added.
By Hwang You-mee (firstname.lastname@example.org)