Kyobo Securities noted on the 19th that while Hanon Systems is expected to improve its performance, the implementation of additional capital increases could hinder the rise in stock prices. The firm therefore lowered its target price from 4,100 won to 3,700 won and adjusted its investment opinion from 'buy' to 'trading buy.' A trading buy indicates that returns exceeding 10% are expected compared to the KOSPI index, but it signifies a high level of uncertainty.
In the second quarter of this year, Hanon Systems reported a revenue of 2.9 trillion won, an 11.7% increase compared to the previous year, while its operating profit recorded 64.3 billion won, a 10.2% decline during the same period.
The expansion in size was significantly influenced by strong sales and new orders for European and domestic original equipment manufacturer (OEM) products. It is expected that the trend of expansion will continue in the second half of the year, with increased shipments of modules and systems for Mercedes and BMW.
Kim Kwang-sik, a researcher at Kyobo Securities, said, "It is positive that cash flow is also improving, but the interest expense remains a burden at 57.9 billion won, and due to negative foreign exchange-related profits and losses caused by exchange rates, a pre-tax loss of 25.6 billion won was recorded."
Kyobo Securities has also noted the additional capital increase plan announced by Hanon Systems. Hanon Systems decided to go for this capital increase to maintain its credit rating and implement restructuring plans for financial reorganization. The scale of the capital increase is estimated to be between 700 billion won and 1 trillion won.
Researcher Kim noted, "The estimated amount of the increase is a figure considering the debt ratio to maintain the current credit rating (AA-) and the borrowing agreement with major creditors," adding, "A notice including amendments to the articles of incorporation and the scale of the capital increase is expected to be made at the extraordinary shareholders' meeting on the 23rd of next month."
He continued, "Considering an issuance price of 3,000 won, the number of issued shares will increase up to 90.46 million shares (33.3%). While performance is expected to grow until 2027, the target price and investment opinion have been lowered due to the increase in the number of issued shares and adjustments to the target valuation (corporate value)."