LS SECURITIES has lowered the target price for Hanwha Aerospace from 810,000 won to 730,000 won, a 10% reduction. This decision is based on the judgment that the increase in the number of circulating shares will inevitably dilute shareholder value in the short term.
On the 16th, LS SECURITIES published a report on Hanwha Aerospace titled "3.6 trillion won capital increase, painful but necessary path," stating that "the purpose of the capital increase is a correct direction," while also noting, "shareholder value dilution is inevitable, and uncertainty regarding whether the raised funds will translate into results has not been resolved."
According to LS SECURITIES, Hanwha Aerospace plans to conduct a capital increase amounting to 3.6 trillion won, aiming for a listing of new shares on June 24. The number of newly issued shares is expected to be around 13.1% based on the number of circulating shares, with the planned issue price set at 605,000 won.
The detailed use of funds includes 1.2 trillion won (33.3%) for domestic facility construction, 1 trillion won (27.8%) for overseas facility construction, 600 billion won (16.7%) for equity investment in overseas joint ventures (JVs), and 800 billion won (22.2%) for equity investment in overseas shipyards.
Choi Jeong-hwan, a Research Institute at LS SECURITIES, pointed out that "the company must secure the legitimacy of the 3.6 trillion won capital increase by not only relying on simple contracts for orders from Poland and Saudi Arabia, but also by capturing new countries and securing contracts in Eastern Europe, Northern Europe, and the Middle East using local bases."
He also said, "Just based on existing order backlog, we already have five years' worth of work. If the company shows a concrete improvement in performance using its local bases, I believe that the upside is greater than the risk based on the current stock price."