BNK Investment & Securities said on the 4th that the main subsidiaries' results are strong for Hansol Holdings(004150), and noted this could be expected to lead to consolidation through expanded shareholder returns at the holding company. It also analyzed that such growth could be a momentum (rising driver) to resolve undervaluation, giving it room to escape the low price-to-book ratio (PBR). It maintained a "Buy" investment opinion and raised the target price to 5,500 won from the previous 5,000 won. Hansol Holdings' closing price the previous day was 3,485 won.
The second-quarter operating profit of Hansol Holdings' key subsidiary Hansol Paper was 50.8 billion won, up 163% from a year earlier.
Kim Jang-won, an analyst at BNK Investment & Securities, said, "Although the results include tariff refunds, there was an effect from improved business structure thanks to strong performance in industrial paper and a special boost in thermal paper," and added, "Excluding the tariff refund portion, the business trend is expected to continue the first-half pattern."
Hansol Technics' operating profit fell short of the previous year on a half-year basis, but revenue increased in the second quarter. It also explained that starting in the third quarter, the results of Hansol Willtech will be reflected through consolidation.
Kim added, "The strength in the main subsidiaries' results underpins the holding company's results, so a solid trend is expected for the separate results as well."
Hansol Holdings, from the standpoint of a net-cash structure on a separate holding-company basis, has continued to make decisions to expand its equity stake while letting major affiliates take the lead role in business expansion that had been under review.
Following Hansol Logistics, it increased its equity stake in Hansol Technics, and, through mergers and acquisitions (M&A), it is expanding its business not only in existing operations but also into new items, it said.
Kim said, "Hansol P&S, which was converted into a wholly owned subsidiary by owning 100% equity, has disparate business structures in paper distribution and IT, and Hansol Papertech, which is engaged in the containerboard business, also has growth limits with containerboard alone, so we see latent potential for change," adding, "The profitability of the main subsidiaries can be expected to lead to consolidation through expanded shareholder returns at the holding company, and the growth potential will be momentum to resolve undervaluation versus intrinsic value, so we assess that it has room to escape the low PBR."