Hanwha Investment & Securities assessed on the 18th that the impact of the reciprocal tariff on Hansei Industry will intensify in the second half of the year. They then downgraded their investment opinion to 'Hold' and revised the target price down to 11,000 won, a 45% decrease from the previous level. The closing price of Hansei Industry on the previous trading day was 10,190 won.
Hansei Industry announced on the 14th that it recorded sales of 475 billion won and an operating profit of 12.3 billion won in the second quarter (April to June) of this year. While sales increased by 6% compared to the same period last year, operating profit decreased by 71%, falling significantly short of securities expectations. According to FnGuide, Hansei Industry is projected to have sales of 472.8 billion won and an operating profit of 27.1 billion won.
Lee Jin-hyup, a researcher at Hanwha Investment & Securities, noted regarding the poor performance, 'The main reason is that the cost rate surged in the second quarter, significantly worsening profitability.' He added that 'the rise in the cost rate is due to the impact of the general tariff (10%) leading to a drop in prices and a decline in the value of the dollar.'
This researcher believes that the impact of the reciprocal tariff on performance must be kept in mind. Currently, the reciprocal tariff rates for Hansei Industry's production facilities located in Vietnam and Indonesia have been confirmed at 20% and 19%, respectively.
The researcher stated, 'With the reciprocal tariff confirmed, discussions with buyers regarding future orders and the distribution of tariff burdens are expected to begin in earnest.' He also said, 'There remains uncertainty about the level of impact the reciprocal tariff will have on performance, so verification through the second-half results is necessary.' He pointed out that 'for the time being, a wait-and-see approach is needed rather than responding immediately.'
Meanwhile, Hansei Industry is reportedly trying to minimize tariff burdens by shifting volumes to countries with relatively lower tariffs, such as El Salvador (tariff rate 10%).