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Renewable energy

Hanwha Solutions shares rebound to near 40,000 won mark 

Positive factors include fall in raw material prices, US tax benefits

By Jan 11, 2022 (Gmt+09:00)

Hanwha Group headquarters in Seoul
Hanwha Group headquarters in Seoul

Hanwha Solutions Corp. shares are rebounding after a two months-long slide. The bounce back comes on the back of expectations that its operating profit could increase some 30% on-year thanks to a fall in raw material prices and tax benefits by the US government for the solar energy industry. 

Hanwha Solutions shares jumped 4.5% to finish Monday’s trade at 38,250 won. Friday's trade finished 6.9% higher. While the share price has been sliding since early November last year, it climbed for the last two consecutive trading days to near the psychologically important 40,000 won level. 

Hanwha Solutions, part of the Hanwha Group, is a multinational energy services, petrochemical, and real estate development company headquartered in Seoul.
 
RAW MATERIALS SUPPLY & TAX BENEFITS

As governments around the world are introducing measures to combat climate change, the solar energy industry is developing rapidly. 

At the same time, raw material prices are stabilizing. The polysilicon prices, which surged to $36 a ton in late October due to supply shortages, fell to $30 a ton thanks to eased power shortages in China. More supplies are expected from China on the back of the expansion of polysilicon production there. 

Over in Washington, expectations are high on the passing of the Solar Energy Manufacturing for America Act (SEMA.) The bill aims to boost the output by providing tax credits for US manufacturers at every stage of the solar energy supply chain – from production of polysilicon to solar cells, trackers and inverters, and fully assembled solar modules.

Once the bill is passed, the tax benefit and government subsidies could account for about one to four trillion won, according to an estimate by Hanwha Investment & Securities Co. 

Hanwha Solutions is currently running a photovoltaic module factory in the state of Georgia. In late 2021, it acquired a 16.7% stake in Norway’s SEC Silicon ASA, which produces polysilicon in the US using hydraulic energy, in an effort to strengthen Hanwha’s supply chain there. 

In 2022, Hanwha Investment & Securities forecasts Hanwha Solutions’s revenue to soar 46% on-year to 15.42 trillion won; and its operating profit to surpass one trillion won for the first time.

An analyst with Hanwha Securities & Investment said he is considering Hanwha Solutions as his top choice amongst six large-cap stocks in the petrochemical and refinery sector; adding that the energy services company is estimated to have the largest jump in operating profit. 

The company’s production of caustic soda, a must in producing positive electrode materials for rechargeable batteries, is also set to add to the company’s performance. 

Hanwha Solutions is the industry leader in the Chlor Alkali (CA) sector that encompasses caustic soda production. Late last year, Hanwha’s board of directors agreed to invest 300 billion won into expanding its caustic soda production line, which already produces 270,000 tons annually. 

Write to Eun-seo Koo at koo@hankyung.com

Jee Abbey Lee edited this article.
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