[Edaily Reporter kyoungeun kim ] Shinhan Investment Securities announced on the 30th that while HANWHA SOLUTIONS(009830)posted second-quarter earnings that exceeded market expectations this year, driven by simultaneous improvements in its solar and chemical business segments, it is lowering its target price to 40,000 won—a 27% reduction from the previous target.

Lee Jin-myung, an analyst at Shinhan Investment Securities, stated, “We are lowering the target price to reflect factors such as downward revisions in industry multiples,” while maintaining a “Buy” rating. The stock has upside potential of 75.1% relative to the previous day’s closing price (22,850 won).

Although the target price has been lowered, analysts assess that the conditions for a stock revaluation are falling into place. The analyst noted, “Module shipments in the second half are expected to rebound to 5.8 GW compared to the first half (3.2 GW), and the expansion of the Production Tax Credit (AMPC) resulting from the Cartersville ramp-up is expected to continue,” adding "If the company’s profit resilience is confirmed through vertical integration and the premium from the Additional Tax Credit (DCA) for using U.S.-made components, the value of its North American solar business could be fully reevaluated."

He cited the competitiveness of the U.S. local production base as the driving force behind this earnings momentum. The analyst predicted, “As the competitiveness of the local production base within the U.S. solar market comes to the fore, the earnings momentum in the renewable energy sector is expected to continue in the second half of the year.” He continued, “Following the rise in selling prices in the first half, sales volume recovery and an increase in AMPC are expected as cell and wafer production in Cartersville returns to normal,” adding, “Combined with the DCA premium, this is expected to strengthen profit resilience over the medium to long term.” Regarding the Chemicals division, he predicted, “While a pattern of higher first-half and lower second-half performance is inevitable, the downside risk to profits will be limited due to improved cost competitiveness.”

In fact, second-quarter results showed a clear improvement in both business divisions. HANWHA SOLUTIONS(009830)’s second-quarter operating profit reached 306.5 billion won, a 231% increase from the previous quarter, significantly exceeding the market consensus (187.7 billion won). Revenue rose 18.1% quarter-over-quarter to 4.5827 trillion won.

Operating profit in the renewable energy segment reached 166.4 billion won, a 168% increase from the previous quarter. Module sales volume totaled 1.3 GW, down from 1.9 GW in the first quarter due to shipment delays in engineering, procurement, and construction (EPC) projects. However, the average selling price (ASP) rose by 5% thanks to an increased share of residential sales, and tariff refunds totaling approximately 90 billion won were also reflected in the results. The residential business performed well, driven by increased thermoplastic polyolefin (TPO) volumes, while operating profit for AMPC was 214 billion won, a slight 2% decrease from the previous quarter.

Operating profit in the Chemicals segment rose 155% from the previous quarter to 87.1 billion won. This was driven by higher product prices resulting from supply disruptions in the Middle East and wider profit margins due to the procurement of low-cost raw materials. The Advanced Materials segment recorded an operating profit of 28.8 billion won, a 136% increase from the previous quarter, driven by higher sales of solar materials in North America. Income from equity method investments rose 136% from the previous quarter to 149 billion won, driven by valuation gains on Hanwha Impact’s financial investment products.