This article was published on April 1, 2025, at 1:08 p.m. on the ChosunBiz MoneyMove site.
With Hanwha Energy, fully owned by the Hanwha brothers, preparing for its listing, securities firms that participated in the selection of lead managers have generally estimated the corporate value at around 4 trillion to 5 trillion won.
The market expects that Hanwha Energy will be recognized with a minimum valuation of 3 trillion won based on the public offering price. The final valuation of Hanwha Energy is likely to be determined by how much of a discount percentage will be applied to the prices of the shares held in affiliated companies and how to evaluate the value of its consistently profitable power generation business.
According to the investment banking (IB) industry on the 1st, Hanwha Energy formed a lead manager group for its listing on the KOSDAQ last month. NH Investment & Securities, Korea Investment & Securities, and DAISHIN SECURITIES became the lead underwriters, while KB Securities and Shinhan Investment Corp. were included as co-underwriters.
An executive in charge of IPO at a securities firm noted, “While some securities firms estimated as high as 8 trillion won, most suggested a valuation in the range of 4 trillion to 5 trillion won,” adding, “Even with discount rates applied, it should be able to gain at least 3 trillion won worth.”
Industry insiders indicate that the valuation calculation formula for Hanwha Energy is more straightforward than expected. It involves reflecting the value of the shares held in affiliated companies and adding the business value, with reports suggesting that the margin of error among securities firms is narrow.
Hanwha Energy holds 8.62% of listed Hanwha shares, 12.8% of Hanwha System shares, and equity stakes in 16 other unlisted companies. Among the unlisted firms are Hanwha Impact (52.07% stake), Daesan Green Energy (49%), and Tongyeong Eco-Power (39.5%), which it jointly holds with HDC Group.
Of the affiliated companies in which Hanwha Energy holds equity, Hanwha Impact (formerly Hanwha Chemical) is by far the company with the highest stock value. Hanwha Impact attempted an IPO in 2021 but was ultimately unsuccessful.
Securities firms are reported to have assessed the equity value based on the net worth of Hanwha Impact. Assuming a price-to-book ratio (PBR) of 1, meaning that the corporate value equals the book value, Hanwha Impact's corporate valuation was estimated at 5.6569 trillion won at the end of last year. With Hanwha Energy holding 52.07% of that, its stake in Hanwha Impact is calculated to be worth nearly 3 trillion won.
In the case of Hanwha System and Hanwha, which are listed companies, the basis for calculating equity value is relatively clear. Based on the previous day's stock prices, the value of Hanwha Energy's stake in Hanwha System (12.8%) is approximately 810 billion won, and the value of its stake in Hanwha (8.62%) is 280 billion won.
The equity values of unlisted firms Tongyeong Eco-Power and Daesan Green Energy are estimated at 117.5 billion won and 32.5 billion won, respectively, based on the assumption of a PBR of 1. Thus, even just adding the equity values of five affiliated companies held by Hanwha Energy already exceeds 4 trillion won.
However, when estimating corporate value, it is common to apply a discount rate of 20% to 50% to the prices of listed shares. Generally, no discount rate is applied to unlisted stock prices. An IB industry official explained, “Therefore, how much discount rate to apply to the equity values of Hanwha and Hanwha System will also affect the overall valuation of Hanwha Energy.”
This official added, “In the case of Hanwha Energy, it is actually generating revenue through its cogeneration and solar energy businesses, as well as its LNG business, so the business value must be reflected in the valuation.”
Last year, Hanwha Energy's consolidated revenue was 5.5851 trillion won, with an operating profit of 210.6 billion won. The company recorded a stable performance with an operating profit of 215 billion won in 2023.
On the other hand, there is a perspective that the possibility of a merger between Hanwha Energy and Hanwha has at least temporarily disappeared, and it remains to be seen how this might impact Hanwha Energy's corporate value. The day before, Hanwha announced that Chairman Kim Seung-yeon had gifted shares he held to Vice Chairman Kim Dong-gwan (4.86%), President Kim Dong-won (3.23%), and Vice President Kim Dong-seon (3.23%).
The three brothers previously held shares in Hanwha through Hanwha Energy, and this gift has raised their stake in Hanwha to 42.67%, indicating that the succession of management rights is complete, according to Hanwha Group's explanation. The market has speculated that Hanwha Energy might merge with Hanwha after going public to increase the equity stake of the three brothers, with analysis indicating that lowering Hanwha's stock price and boosting Hanwha Energy's stock price would be advantageous for this strategy.