The announcement of a large capital increase by Hanwha Aerospace caused Hanwha Group's market capitalization to evaporate by nearly 6 trillion won in one day. The ranking of large corporate groups by market capitalization dropped Hanwha Group to 6th place, losing the 5th spot to HD Hyundai Group.
According to the Korea Exchange on the 21st, 9 out of 11 listed companies in Hanwha Group showed weak stock prices that day. The total market capitalization of Hanwha Group fell by 5.977 trillion won, from 76.851 trillion won the previous day to 70.874 trillion won.
Hanwha Aerospace experienced a significant drop. The stock price of Hanwha Aerospace fell by 13.02% (94,000 won) compared to the previous day. Its market capitalization decreased by about 4.285 trillion won, from 32.910 trillion won to 28.625 trillion won. It is the first time in 20 trading days that Hanwha Aerospace's market capitalization fell below 30 trillion won according to closing prices.
The fallout also affected the holding company Hanwha. Hanwha's market capitalization decreased by about 446 billion won, from 3.561 trillion won to 3.115 trillion won in one day. Hanwha holds 33.95% equity in Hanwha Aerospace. If Hanwha fully participates in this capital increase, it plans to receive 1,620,298 new shares. Based on the estimated issuing price, it amounts to 980 billion won. Hanwha plans to hold a board meeting to determine the exact level of participation in the capital increase.
Additionally, Hanwha System, Hanwha Ocean, and Hanwha Solutions also closed lower. Hanwha Engine showed a weak trend during the day but rebounded before the market closed after announcing a supply contract for marine engines worth 84 billion won.
Hanwha Aerospace disclosed a plan for a shareholder-allotted capital increase worth 3.6 trillion won after the previous day's market close. The company plans to invest the raised funds into foreign defense projects worth 1.6 trillion won, domestic defense projects worth 900 billion won, overseas shipbuilding projects worth 800 billion won, and drone engines worth 300 billion won.
Hanwha Aerospace noted that the need to secure overseas production bases has increased to seize opportunities as weapon demand grows in Europe and the Middle East. The company also presented a blueprint to achieve 70 trillion won in consolidated revenue and 10 trillion won in operating profit by 2035.
A representative from Hanwha Aerospace explained, "The blockification of the European defense market is accelerating through 'Readiness 2030,' and the barriers to entry for overseas defense companies are also rising. We made this decision to invest through a capital increase due to a pressing judgment that it would be difficult to survive in the rapidly changing defense market if we do not respond quickly."
However, investors concerned that the stock value of Hanwha Aerospace would dilute due to the issuance of new shares from the capital increase began to sell. The ratio of new shares to the total issued shares is 13.05%.
By investor type, institutions net sold Hanwha Aerospace shares worth 115 billion won. Foreign and individual investors showed net buying advantages of 72 billion won and 42 billion won, respectively. The scale of foreign net purchases was the third largest, following Samsung Electronics and SK hynix.