Hanwha Group expects narrower discount and stronger shareholder returns after spin-off; target price raised - Mirae Asset Securities

[Financial News] Mirae Asset Securities said on the 25th that it expects Hanwha Group to see a narrower valuation discount and stronger shareholder returns following its spin-off. The firm maintained its "buy" rating and raised its target price to 185,000 won from 107,000 won.
Ryu Jae-hyun, a researcher at Mirae Asset Securities, said, "The purpose of Hanwha Group's split is to establish responsible management by business segment and secure a fair valuation from the market. It is an attempt to eliminate the discount factors that the conglomerate holding structure has faced by separating businesses according to their characteristics." He added, "The separation of valuation standards between growth assets and mature assets is the biggest significance of this split."
Hanwha Group, which completed its spin-off on the 1st, will undergo a change listing for the surviving entity and a new listing for the newly established company on the same day. The surviving Hanwha Group will hold stakes in defense, shipbuilding, energy and finance, as well as construction and global in-house businesses. It transferred Vision, Galleria Department Store, Hanwha Hotels & Resorts, Hanwha Momentum, and Hanwha Robotics to the newly established Hanwha M&S.
Ryu estimated that the discount rate would narrow from 54.75%, the level observed on the 29th of last month before trading was suspended, to 50.85% in 12 months. He explained that this reflects the structural reduction in discount factors as all unlisted subsidiaries are transferred.
He also expected shareholder returns to improve amid solid growth in the defense business. Ryu said, "The reduction in consolidated scope in the second half is expected to be offset by higher defense and shipbuilding volumes." He added, "Most of the funds for shareholder returns will remain with the surviving entity, and since the minimum dividend per share of 1,000 won and the cancellation of treasury shares and preferred shares are already tied to disclosures, further enhancement of shareholder value is also expected."

[email protected] Seo Min-ji Reporter