iM Securities maintained a buy rating and a 138,000 won target price for Hanwha stocks on the 27th. The firm stated that demerger-related uncertainty factors have already been reflected in recent stock prices. Analyst Lee Sang-heon cited Hanwha's high correlation with core subsidiary Hanwha Aerospace stock and reliable multi-year statistical data. Hanwha's shareholder meeting approved the demerger plan on the 15th, with a 76:24 ratio splitting the company into an existing entity retaining defense, shipbuilding, energy, and financial subsidiaries, and a new entity Hanwha Machinery & Services Holdings incorporating machinery, semiconductor, robotics, retail, and service subsidiaries. The revised Commercial Act, effective July 23 and September 10, is expected to improve governance by limiting major shareholder voting rights and expanding independent audit committee oversight.
iM Securities Maintains Buy Rating and Target Price for Hanwha Stocks
Analyst Lee Sang-heon of iM Securities stated in a report on the 27th that Hanwha's stock price shows a very high correlation with Hanwha Aerospace stock, and the multi-year time series provides high statistical reliability for the analysis. The firm maintained its target price at 138,000 won. Lee noted that the existing entity will retain core group subsidiaries including Hanwha Aerospace, Hanwha Ocean, Hanwha Solutions, and Hanwha Life, maintaining its focus on defense, shipbuilding, ocean, energy, and financial sectors.
Hanwha Demerger Ratio and Trading Schedule Confirmed
Hanwha's shareholder meeting approved the demerger plan on the 15th as originally proposed. The demerger ratio is 0.7563533 for the existing entity and 0.2436467 for the new entity, approximately 76:24 based on net asset book value. Existing shareholders will receive shares in both the existing entity and the new entity according to this ratio. Trading of Hanwha stock will be halted from July 30 to August 24 ahead of the August 1 demerger date. On August 25, Hanwha is scheduled for amended listing and the new entity for relisting.
The new entity, Hanwha Machinery & Services Holdings, will include machinery, semiconductor equipment, and robotics subsidiaries such as Hanwha Vision, Hanwha Semitech, Hanwha Momentum, and Hanwha Robotics, as well as retail and service subsidiaries including Hanwha Galleria, Hanwha Hotels & Resorts, and Ourhome.
New Entity May Face Initial Overvaluation Risk
Lee noted that the demerger ratio is based on simple net asset book value, which does not appropriately apply valuation metrics. He stated that the higher the market capitalization immediately before the trading halt, the higher the possibility that the new entity Hanwha Machinery & Services Holdings will be overvalued. The analyst explained that the new entity requires considerable time to verify subsidiary value increases and new business growth potential from the initial establishment stage, which can expand uncertainty.
Lee cited similar cases such as LX Holdings and HS Hyosung, where such uncertainty factors were reflected in stock prices for a considerable period from the initial establishment stage.
Revised Commercial Act to Improve Hanwha Governance Structure
iM Securities expects Hanwha's governance structure to improve as a positive factor under the revised Commercial Act, which includes separate election of audit committee members. The revised law, effective from July 23, limits voting rights of major shareholders and related parties to 3% when audit committee members who are outside directors are appointed or dismissed. Additional provisions effective from September 10 expand the separate election of audit committee members for large listed companies from one to two members.
Lee stated that Hanwha's special relationship holdings excluding Hanwha Energy reach 55.8%, increasing the likelihood that minority shareholders, overseas institutional investors, and activist funds will intervene in management starting with the appointment and dismissal of audit committee members. He noted that the effect of improving Hanwha's governance structure will be significant as a more independent audit body.
The cumulative voting system, also effective from September 10, is expected to help improve Hanwha's governance structure in terms of securing diversity of directors and strengthening the principle of checks and balances. Lee stated that holding companies like Hanwha with strong controlling shareholder influence have a high possibility of conflicts of interest between controlling shareholders and minority shareholders, so the governance improvement effect from the introduction of the cumulative voting system will be significant.
FAQ
What target price did iM Securities set for Hanwha stocks on the 27th?
iM Securities maintained a target price of 138,000 won for Hanwha stocks on the 27th, keeping its buy rating unchanged. Analyst Lee Sang-heon cited the high correlation between Hanwha stock and Hanwha Aerospace stock, supported by reliable multi-year statistical data.
When will Hanwha stock trading be halted for the demerger?
Hanwha stock trading will be halted from July 30 to August 24 ahead of the August 1 demerger date. On August 25, Hanwha is scheduled for amended listing and the new entity Hanwha Machinery & Services Holdings for relisting, following the shareholder meeting approval of the demerger plan on the 15th.
