DAOL Investment & Securities said on the 30th that Hanon Systems' corporate value has passed the bottom and that its financial structure is expected to improve after the fourth quarter of this year. It raised its target price to 4,100 won from 3,800 won while maintaining a neutral investment rating. Hanon Systems' closing price in the previous trading session was 4,265 won.
In the third quarter of this year, Hanon Systems posted sales of 2.7 trillion won, up 8.2% from a year earlier, and operating profit of 95.2 billion won, down 9.2%. Due to the narrower scope for capitalizing R&D (research and development), expense increased by about 38.3 billion won, while cost efficiency improved as restructuring, including other labor costs, proceeded. The company was reimbursed for about 95% of tariff costs totaling roughly 50 billion won.
Yu Ji-ung, an analyst at DAOL Investment & Securities, said, "Sales fell 5.4% from the previous quarter, but the cost ratio improved through expense control," adding, "Since the fourth quarter of last year, a cost ratio improvement trend has been confirmed for three consecutive quarters." This means the basic goal of the new management is to expand opportunities for new orders going forward. Yu estimated that Hanon Systems' operating profit next year will rise 24% from a year earlier to 303 billion won.
Hanon Systems shared in a conference call that it plans to lower its cost of goods sold ratio from the current 91% to around 85% by 2028. After 2028, as the effect of reducing the capitalization ratio for development costs kicks in, the company's new orders in 2026–2027 are expected to be the key to medium- to long-term corporate value. However, at present the company is focusing on annual average topline growth of around 5% through 2027, so it will take some time before the new order strategy accelerates.
Yu said, "After the fourth quarter of this year, it is necessary to confirm the trend of financial structure improvement and the continuity of topline growth," noting that "expectations for a turnaround are relatively high."