Yuanta Securities Korea on the 1st emphasized that a rights offering worth 1.7 trillion won is essential for Hanwha Solutions this year. It maintained its investment rating at Neutral (Hold) but raised the target price to 35,900 won from 30,000 won.
Yuanta Securities Korea said that while Hanwha Solutions' operating results this year are expected to move off the bottom, an incomplete earnings recovery is likely because of the burden of financial expense.
For the full-year outlook, it projected revenue of 167 trillion won, operating profit of 122.5 billion won, and a controlling-shareholder net loss of 317.7 billion won.
Hwang Gyu-won of Yuanta Securities Korea said, "Operating profit and loss will swing to a surplus from last year's 364.8 billion won operating loss, but a 470 billion won financial cost stemming from 13 trillion won in net debt makes a fourth straight year of net loss unavoidable."
It also analyzed that the most important issue for Hanwha Solutions this year will be reducing financial burdens. To start, interest-bearing borrowings this year amount to 18.9 trillion won.
Hwang explained, "Looking at the maturity profile, 1.6 trillion won this year, 1.8 trillion won in 2027, 1.7 trillion won in 2028, and 1 trillion won in 2029 mean the repayment burden rises from this year through 2027," adding, "But this year there is a cash shortfall."
Therefore, the rights offering underway at Hanwha Solutions is deemed essential. Hanwha Solutions is proceeding with a 1.7 trillion won rights offering this year.
Hwang analyzed, "It is not only to reduce the financial burden on the 3.4 trillion won maturing in 2026–2027, but also because the parent company's financial stability is crucial to successfully carrying out the Yeosu-area petrochemical restructuring being pursued at the national level."