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Photo=Hanhwa System |
[Alpha Biz= Kim Jisun] On February 11, Daishin Securities increased Hanwha Systems' target price from KRW 26,000 to KRW 32,000, marking a 23.1% upward revision.
Daishin Securities cited rising pre-tax earnings in 2024 and the anticipated benefits from the acquisition of the U.S.-based Philly Shipyard as key drivers of this revision. Philly Shipyard’s financials are expected to be reflected in Hanwha Systems' consolidated earnings starting in Q1 2025.
Hanwha Systems expects Philly Shipyard’s deficit to narrow in 2025, with a potential turnaround to profitability projected for 2026.
The brokerage firm noted, "Initially, the company aims to expand commercial shipbuilding in the U.S., with future plans to enter the naval vessel construction sector upon obtaining relevant licenses. Given the U.S. Navy's growing concerns over a shortage of modern vessels, the value of a domestic production base in the U.S. is expected to rise."
In Q4 2024, Hanwha Systems reported consolidated revenue of KRW 933.5 billion and an operating profit of KRW 29.1 billion, falling significantly short of the consensus estimate of KRW 42 billion.
Sales were bolstered by domestic projects, including the fourth phase of TICN production and the second phase of TMMR production, alongside exports such as Poland’s K2 and the UAE's M-SAMMFR contracts, pushing quarterly revenue beyond KRW 900 billion.
However, one-time costs, including legal and consulting fees related to the Philly Shipyard acquisition (Hanwha Systems' stake: $60 million out of a total $100 million) and year-end performance bonuses, impacted profitability. Aside from a slight increase in development expenses, recurring earnings remained stable.
AlphaBIZ Kim Jisun(stockmk2020@alphabiz.co.kr)
