Kiwoom Securities on the 15th assessed Hanwha's participation in the oversubscription of Hanwha Solutions' rights offering as a "rational decision for group growth."
Earlier, on the 26th, Hanwha Solutions announced a rights offering worth 2.4 trillion won. It plans to use 1.5 trillion won for debt repayment and 900 billion won for facility investment.
As investor concerns arose over where and when the rights offering funds would be used, Hanwha decided to oversubscribe. Hanwha is the largest shareholder, holding 36.7% equity in Hanwha Solutions. In particular, it plans to invest 843.9 billion won by subscribing to more than 120% of the allotted amount.
Hanwha plans to raise the funds needed for the rights offering by monetizing owned real estate and noncore subsidiaries. Ahn Young-jun, an analyst at Kiwoom Securities, said, "If the monetization of noncore assets proceeds smoothly, the financial burden will be limited," adding, "It could even improve capital efficiency."
There is also an outlook that dilution of Hanwha's equity ratio before and after the rights offering will be limited. Ahn said, "While this could change depending on future developments, for now the expected financial structure and changes in net worth value (NAV) are not large, so the impact on corporate value will be limited."
In addition, the largest shareholder's oversubscription was assessed as a positive signal to the market. He said, "The participation of the largest shareholder in a rights offering is interpreted as confidence in the growth potential of the fundraising corporations," adding, "Hanwha's oversubscription will contribute to smooth fundraising by Hanwha Solutions."
However, the judgment is that performance is what ultimately matters. He added, "The validity of a rights offering is, in the end, determined by whether the use of the funds raised leads to improved future performance."