Hanwha Soars with Defense and Shipbuilding Momentum... How Long Will the Rally Last?

Hanwha Shares Surge After Spin-Off Relisting
Four-Day Rally Leads to 34% Gain
Re-rating Expectations Grow as Holding Company Discount Narrows
Hanwha Aerospace Emerges as the Key Driver

Following its spin-off and subsequent relisting, Hanwha has maintained a relentless upward trend since the resumption of trading. Analysts point out that the group’s holding company value, which had been undervalued due to a complicated business structure, is now entering a full-fledged re-rating phase.

According to the Korea Exchange, Hanwha closed at 134,900 won on August 28, up 3.61%. Since trading resumed on August 25, the company has been on a four-day winning streak. On its first day of relisting, August 25, Hanwha started at an opening price of 100,600 won and surged by 17.4%. The stock continued its rally, rising 34.10% from its initial price.

This robust performance is believed to reflect growing expectations that Hanwha will now be properly evaluated following the spin-off. Through the recent spin-off, the defense, shipbuilding, marine, energy, and financial affiliates—including Hanwha Aerospace, Hanwha Ocean, Hanwha Solutions, and Hanwha Life Insurance—were incorporated under Hanwha. Meanwhile, the tech and lifestyle affiliates, including Hanwha Vision, Hanwha Semitek, Hanwha Momentum, Hanwha Robotics, Hanwha Galleria, Hanwha Hotels & Resorts, and Ourhome, were transferred to Hanwha Machinery & Services Holdings.

With the removal of unlisted subsidiaries and an increased proportion of core subsidiaries, the discount rate is expected to improve. Jae-Hyun Ryu, an analyst at Mirae Asset Securities, said, “This spin-off fundamentally changes the framework for calculating the discount rate. The value proportion of unlisted subsidiaries essentially becomes zero, eliminating the extra discount factors previously assigned for the opacity of unlisted assets. Furthermore, the proportion of defense assets among listed assets rises to about 80%, so Hanwha will now be compared to ‘defense holding companies’ instead of as a ‘complex holding company.’” Mirae Asset Securities forecasts that Hanwha’s discount rate, which was observed at 54.75% just before the trading halt on July 29, will shrink to 50.85% in 12 months.

In particular, Hanwha Aerospace’s value is expected to stand out even further, contributing significantly to Hanwha’s overall corporate value. Na-Ye Lee, an analyst at Korea Investment & Securities, remarked, “As Hanwha’s corporate value is restructured around the three pillars of defense and shipbuilding, energy, and finance—plus its own businesses, including construction and global operations—the purity of defense and shipbuilding within net asset value (NAV) will increase. Before the spin-off, Hanwha Aerospace already accounted for around 70% of Hanwha’s investment asset value, but since business segments like security, semiconductor equipment, and distribution have now been separated, Hanwha Aerospace’s influence will grow even more.”

Earnings for the remainder of the year are also expected to be strong. Although the results of the transferred subsidiaries will be excluded, the solid performance of the defense and shipbuilding businesses is expected to more than make up for this. The results of the five transferred companies will be included for only one month in the third quarter, after which they will be excluded from consolidated earnings. Analyst Ryu explained, “Excluding the five transferred firms, consolidated revenue per quarter will decrease to around 1.7 trillion won, but increased volume in defense and shipbuilding will more than offset this gap.”

It also appears that Hanwha Aerospace will play a leading role in driving overall results. According to financial information provider FnGuide, Hanwha Aerospace’s consensus for the third quarter calls for revenue of 7.7157 trillion won, up 18.9% from a year earlier, and operating profit of 1.2356 trillion won, up 44.3%. For the fourth quarter, revenue is expected to grow by 15.0% to 9.6809 trillion won, with operating profit rising 78.3% to 1.4402 trillion won. Ryu added, “Ongoing increases in ground defense volumes and the expansion of Hanwha Ocean, as well as rising aviation engine deliveries, will make Hanwha Aerospace the main driver of earnings growth. In 2027, Hanwha Aerospace is expected to account for 66% of continuing operating profit, meaning its performance will effectively determine the direction of Hanwha’s results after the spin-off.”

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