Hanwha shares gain traction on rosy outlook for aerospace, solar power biz

2021.01.14 12:04:39 | 2021.01.14 12:05:30

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Shares of Hanwha Corporation, the holding company of South Korea’s seventh-largest conglomerate Hanwha Group, have gained traction lately, jumping over 7 percent this year after a lackluster 2020 thanks to improved earnings of its solar power business unit and aggressive expansion into aerospace sector.

As of Wednesday, Hanwha shares have soared 7.2 percent this year, gaining momentum early on compared to a 13.2 percent gain across the full year in 2020.

Other Hanwha Group shares are also on rally this year.

Last year, Hanwha Solutions Co., the group’s chemical manufacturing and solar power business unit, was the only unit that saw shares more than double by 154.1 percent. Shares of Hanwa Life Insurance Co. rose 5.6 percent while those of Hanwha Aerospace Co. fell 18.7 percent.

Hanwha Life Insurance has seen stock price go up 32.6 percent as of Wednesday and Hanwha Aerospace 15.9 percent and total solutions company Hanwha Systems Co. 9.8 percent.

Kim Seung-youn, chairman of Hanwha Group, owns 22.7 percent of stake in Hanwha Corp., the holding company that has control over other entities Hanwha Life Insurance (18.2 percent), Hanwha Solutions (37 percent), and Hanwha Aerospace (33.9 percent). Hanwha also owns 95 percent stake in non-listed Hanwha Engineering & Construction and 50.6 percent in Hanwha Hotels & Resorts.

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Hanwha shares have gained traction after Hanwha Group officially announced Wednesday its plan to expand its aerospace business through a 20 percent stake acquisition in Satrec Initiative (SI), a local satellite system developer, for 58.9 billion won ($53.6 million).

An unnamed official from the financial investment industry said major conglomerates have shown aggressive inroads into new business sectors in the start of the year – SK Group in hydrogen and bio sectors and LG Group in secondary battery cells – but there was no such movement by Hanwha Group.

Investor sentiment seem to have turned friendly towards Hanwha shares amid growing interest in aerospace business in Korea after developments achieved by American aerospace manufacturer SpaceX.

Hanwha is also expected to see improved earnings this year on the back of rosy outlook for its subsidiaries including Hanwha Life Insurance.

According to Kyobo Securities, Hanwha Life Insurance is projected to raise 298.7 billion won in net profit this year, up 31 percent from last year.

[Photo by Hanwha Aerospace]이미지 확대

[Photo by Hanwha Aerospace]

Kim Ji-young, a researcher at Kyobo Securities, said that life insurance business is highly sensitive to interest rates and that a rise in the market rate this year will improve investor sentiment.

According to Daishin Securities, Hanwha Aerospace and Hanwha Systems, two major units dedicated to defense and aerospace sectors, are expected to report improved fourth-quarter earnings.

The brokerage projected Hanwha Aerospace to have raised 67.4 billion won in operating income in the October-December period, up 92 percent from the same period a year ago. Revenue is also projected to have surged 13 percent to 1.8 trillion won during the same period.

Hanwha Systems is also expected to see a 17 percent jump in its fourth-quarter operating profit at 28.2 billion won and 38 percent jump in revenue at 643.9 billion won on the back of solid defense business.

By Kang Bong-jin and Lee Eun-joo

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