[Edaily Reporter Kim Kyung-eun] On the 10th, SangSangIn Securities maintained its “Buy” rating on #Hanon Systems while raising its target price to 5,500 won. This decision is based on expectations that the application of thermal management systems will expand beyond automobiles to include robots and data centers, in addition to the company’s solid earnings trend centered on Europe.
Yoo Min-ki, an analyst at Sangsangin Securities, stated, “We expect the company to expand the application areas of its thermal management systems and components in line with improvements in its financial structure.” He added, “Starting with robots, which have smaller spaces for thermal management components compared to automobiles, we anticipate a sequential expansion of applications into data centers and energy storage systems (ESS).”
Second-quarter earnings are projected to be in line with market consensus (FnGuide operating profit of 108.1 billion won), with revenue of 3.0297 trillion won (up 4.6% year-over-year) and operating profit of 98.7 billion won (up 53.4%). Following sales growth of 16% year-over-year in Europe and 7% in South Korea during the first quarter, the company expects a similar trend to continue in the second quarter.
In North America, the company is reportedly in discussions regarding partial cash compensation and securing alternative orders for other platforms following the suspension of Ford’s next-generation electric vehicle (EV) project, and the possibility of discussions with North American automakers regarding new business ventures remains open.
Improvements in the company’s financial structure are also cited as a key investment point. Through a rights offering in December of last year, the company raised 983.4 billion won, of which 883 billion won was used to repay debt, lowering the debt-to-equity ratio from 257% to 165% (as of the first quarter). Depreciation expenses are estimated to peak at approximately 750 billion won this year.
Analyst Yoo explained, “The company possesses a product portfolio capable of supporting mechanical, air-cooled, and water-cooled thermal management systems, making it easy to expand into other applications,” adding, “Production bases in North America, Europe, China, and South Korea have already been secured.”