[Click e-Stock] "Hanamaterials Excessively Undervalued...Focus on Semiconductor Growth Potential"

"Concerns over the new silicon anode material business are overstated"
Target price revised downward... 'Buy' recommendation maintained

A securities industry analysis has indicated that Hanamaterials is excessively undervalued due to concerns over its new business ventures. The report suggests that the strong earnings growth potential of the semiconductor components business could be re-evaluated.

On August 25, Ryu Hyeong-Geun, a researcher at Daishin Securities, stated, "Concerns over the new silicon anode material business are overstated, and the current share price underestimates the growth value of the semiconductor business," maintaining a 'buy' recommendation. However, reflecting the valuation gap, he revised the target price downward from 106,000 won to 90,000 won.

He emphasized, "Resolving misunderstandings about the new business, combined with the semiconductor segment's strong profit growth, will drive a share price rebound."

Misunderstandings Over New Business Efforts Addressed...Limited Cost Burden

Hanamaterials is investing 70.2 billion won to build a mass production line for silicon anode materials. Analyst Ryu estimates that sample testing for major customers has likely been completed successfully, and that the outlook for customer and application acquisition has improved significantly. He added, "It is expected to be used in electric vehicles and robotics, with full-scale sales beginning in 2028."

He also believes that the impact of the new business on profitability will be limited. Ryu stated, "Silicon, one of the key raw materials, can be self-procured at the group and company levels. By utilizing by-products from the semiconductor business, the cost burden related to silicon is limited. Therefore, it is unreasonable to conclude that pursuit of the new business will undermine overall profitability," he argued.

He also expects the growth momentum of the semiconductor components business to strengthen further. Ryu said, "With severe semiconductor supply shortages, major customers are increasing their capital expenditures and utilization rates. This change allows genuine (before-market) suppliers to maximize profits."

Next Year's Price-Earnings Ratio Only 9.8...Now Is the Time for Active Buying

The financial outlook is also positive. Daishin Securities projected Hanamaterials’ operating profit for this year at 104.5 billion won, up 108.6% year-on-year, and forecast an operating margin of 27%.

From a valuation perspective, the shares are seen as excessively discounted. Ryu noted, "According to Daishin Securities' profit forecasts, next year's price-earnings ratio (PER) is only 9.8. While the target price is adjusted downward—reflecting the valuation gap—by lowering the applied target PER from 22 to 18, the consensus remains that the stock is significantly undervalued."

He added, "There is a need for the semiconductor business's strong earnings growth value to be further reflected in the share price, and now is the time to take an active buying approach."

This content was produced with the assistance of AI translation services.