Global investment bank (IB) Bank of America (BofA) assessed that the stock price adjustment due to Hanwha Aerospace's large-scale capital increase could present a buying opportunity.
According to the financial investment industry on the 21st, BofA stated in a report that it has raised the target price for Hanwha Aerospace from 700,000 won to 820,000 won. This is 13.6% (98,000 won) higher than Hanwha Aerospace's closing price the previous day (722,000 won).
Hanwha Aerospace announced a plan for a capital increase of 3.6 trillion won after the market closed the previous day. The funds raised will be invested in overseas defense at 1.6 trillion won, domestic defense at 900 billion won, overseas shipbuilding at 800 billion won, and drone engines at 300 billion won.
BofA expects that Hanwha Aerospace will utilize the funds for investments in the Poland Czemów production base, equity investments in the Australian shipyard Austal, and the acquisition of new shipyards in the United States.
BofA also noted that it is not surprising for Hanwha Aerospace to have a large-scale capital increase, considering that Hanwha Group has had a practice of repeatedly raising capital over the past few years, indicating that this is not a new occurrence.
BofA then said, "Given the still robust outlook for ground defense orders and the planned diversification of regional and product mix, I think the potential adjustments due to capital increase should be viewed as a buying opportunity."
However, one must leave open the possibility that the stock price may drop significantly in a short period. The previous day, Hanwha Aerospace closed at 650,000 won in after-hours trading, falling 9.97% (72,000 won) from the closing price after announcing its capital increase plan. It reached the lower limit based on after-hours trading (-10% compared to the closing price).