DS Investment & Securities on the 27th offered a "sell" recommendation on Hanwha Solutions, saying the effects that can be expected from the rights offering released the previous day are minimal.
Earlier, Hanwha Solutions said it held a board meeting and decided on a rights offering of 2.4 trillion won through a shareholder allotment followed by a public offering of forfeited shares. The use of funds is 1.5 trillion won for debt repayment and 900 billion won for facilities.
Ahn Ju-won, an analyst at DS Investment & Securities, said, "By the end of 2025, Hanwha Solutions' net debt will be 13 trillion won, and a 1.5 trillion won repayment cannot meaningfully reduce borrowing fund," adding, "the expected effects of this rights offering are minimal."
Ahn also saw room for additional fundraising. Ahn said, "Because the possibility of improving the financial structure through asset sales is also limited, other forms of financing are possible if the remaining borrowing fund is to be reduced going forward."
He also viewed the rationale as weak regarding how the facilities funds would be used. He said, "Investment in new technology is a strategy that accompanies stable profits and cash flow," adding, "in the current financial structure, the 900 billion won to be invested in mass production of tandem and building TOPCon cell lines does not appear to be a rational investment."
On the space solar segment, which had been cited recently as a driver of share price gains, he said, "The benefits returning to domestic companies will be extremely limited." He said, "In solar, Chinese companies already lead in technology and price competitiveness," adding, "it is important to analyze U.S. solar power demand prospects and the degree of secondary benefits for domestic companies from policies excluding Chinese products."
He added, "As the domestic government is rapidly pushing the transition to renewable energy, it is time to turn to the domestic market."