Hanon Systems’ profitability rebound gathers pace as it expands into data centers and robotaxis

[Financial News] Hanon Systems is expected to sustain its improving profitability despite sluggish conditions in the finished-vehicle market. The effects of restructuring and cost recoveries from customers are gathering pace, while the expansion of its thermal management business beyond the automotive sector into data centers and robotaxis is also seen as a new growth driver.
On the 7th, Korea Investment & Securities maintained its Buy rating and 5,000-won price target for Hanon Systems. It forecast third-quarter operating profit of 112 billion won, up 17.6% year on year and 8.0% quarter on quarter. The operating margin was estimated at 3.9%.
That is 4.3% below the market consensus but 27.1% above Korea Investment & Securities’ previous estimate. The difference reflects greater cost savings from restructuring despite weak finished-vehicle sales, as well as higher-than-expected recoveries from customers to offset cost increases.
The company’s profitability has in fact been steadily recovering. Its operating margin rose from a low of 3.3% in the fourth quarter of last year to 3.5% in the first quarter and 3.6% in the second quarter of this year. Kim Chang-ho, an analyst at Korea Investment & Securities, said, “I expect the company’s operating margin to rise to 3.9% in the third quarter and then to 4.1% in the fourth quarter,” adding, “However, net income attributable to controlling shareholders will swing to a loss because of foreign-currency translation losses resulting from the stronger won.”
Korea Investment & Securities identified HVAC after-sales service, data centers and robotaxis as new growth drivers for Hanon Systems. The company has begun supplying T Station stores in South Korea directly and is also pursuing partnerships with distribution channels in the United States. Over the medium to long term, Hanon Systems aims for after-sales service to account for 8–10% of sales and for an operating margin of at least 10%. In data centers, it is targeting liquid-cooling systems that cool power-conversion equipment. Analysts say the systems have a structure similar to cooling systems for electric-vehicle batteries and inverters, allowing the company to leverage its existing thermal management technology. Supply is still at the prototype stage, and Hanon Systems plans to disclose an update on the business during the fourth quarter.
Supply for the robotaxi business has already begun. Hanon Systems is the sole supplier of HVAC and thermal management systems to Zoox, Amazon’s autonomous-driving subsidiary. With seat-by-seat climate control as well as cooling for autonomous-driving computers and sensors, the average selling price (ASP) per vehicle is understood to be about three times that for internal-combustion-engine vehicles.
Analyst Kim said, “A return to normal profitability and a return on equity (ROE) of around 10% are achievable in 2029,” and assessed that “despite weakness in the end market, the company is strengthening its underlying capacity to secure profitability of at least 4% as cost reductions and cost recoveries from customers continue.” 
However, the overhang from second-largest shareholder Hahn & Company remains a factor. Kim added, “Hahn & Company can exercise a put option with Hankook Tire on 5.7% of its current stake at 5,200 won per share for one month starting January 11, 2027.” 
[email protected] Kim Gyeong-a Reporter