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Renewable energy

Hanwha Solutions, affiliates’ shares soar on Green New Deal, defense

Sep 08, 2020 (Gmt+09:00)

Share prices of Hanwha Solutions Corp. and other Hanwha Group units are being re-rated as the companies shift their business focus to the green energy, fuel cell and defense sectors with high growth potential.

According to market tracker FnGuide, Hanwha Group’s market capitalization has risen to 15.5 trillion won, up more than 45% from 10.65 trillion won at the end of 2019. Riding investors’ keen interest in solar, fuel cell and defense stocks, Hanwha Group affiliates saw their share prices rise by as much as a combined 1 trillion won in the past three trading sessions.

Largely fueling the gains is Hanwha Solutions, which is transforming from simply a manufacturer to a ‘total energy service provider.’ Its stock has rallied over 20% this month, although it finished 5.9% lower to 46,150 won on September 8 as traders took profit from the steady rise over the past couple of weeks.
Hanwha Solutions' solar plant in South Korea

Hanwha Solutions is focusing on green industry investment to expand its renewable energy business value chain, including solar power and hydrogen ventures. Just two years ago, the petrochemicals and materials businesses accounted for half the company’s revenue. But its solar business has since grown rapidly to replace petrochemicals and become the company’s biggest revenue-producing division.

Accordingly, analysts are raising their target prices on the expansion of its solar division and the upping of its hydrogen business capability.

SHARE PRICE RE-RATINGS

Heungkuk Securities recently lifted its target price for Hanwha Solutions to 66,000 won, citing its efforts to commercialize perovskite solar cells (PSC), which are more efficient than the existing silicon cells.

NH Investment & Securities said it is maintaining its Buy rating for Hanwha Solutions, presenting it as its sector top pick.

The brokerage house said it expects Hanwha’s hydrogen business to diversify further thanks to its cooperation with US hydrogen truck maker Nikola Motor Co. Hanwha Solutions owns a 3.07% stake in Nikola via subsidiary Hanwha General Chemical Co., which has a 36% stake in the US company.

“Once its US market hydrogen business earnings become more visible, not only will the value of the stake in Nikola rise, but we believe that Hanwha Solutions will also garner new business opportunities in the US market,” NH said in a research note.

Shares of Hanwha Aerospace Co. have also risen in recent sessions on news its subsidiary Hanwha Defense Co. had been named the preferred supplier of its K9 self-propelled howitzers to Australia.

Aided by its affiliates’ performance, Hanwha Group’s holding company, Hanwha Corp., saw its shares rise 16.7% this month, prompting Daishin Securities to raise its target price to 40,000 won from 34,000 won.

“We’re raising Hanwha Corp.’s target price, reflecting its increased net asset value following its affiliates' share price hikes. Hanwha is likely to remain the market’s darling, given its focus on the green industry,” said Daishin Securities analyst Yang Ji-whan.

By Jaw-Won Park

wonderful@hankyung.com

In-Soo Nam edited this article

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