[Click e-Stock] "HDC: Strong Results from Power Generation and Construction Subsidiaries... Target Price Maintained"

Hanwha Investment & Securities:
"Corporate Value Expected to Rise"

Hanwha Investment & Securities maintained its "buy" investment rating and a target price of 34,000 won for holding company HDC, which oversees construction and energy affiliates, on September 10. This represents an upside potential of 45.6% compared to the closing share price of 23,350 won as of September 8. The main justification given was a clear improvement in the second-half earnings of key subsidiaries such as Tongyeong Eco Power and IPARK Hyundai Development Company.

Yurim Song, an analyst at Hanwha Investment & Securities, stated, "In the second half of the year, strong performances from the company’s major subsidiaries are expected to continue to drive significant profit improvement." She added, "We also expect a variety of corporate actions that could further boost corporate value, such as more efficient use of land holdings, expansion of the business portfolio, and utilization or disposal of treasury shares."

Tongyeong Eco Power, an energy generation subsidiary, is poised to post strong results in the third quarter, benefiting from the peak summer power demand and higher system marginal prices (SMP). This high profitability is expected to be sustained through the fourth quarter, supported by firm energy prices. Meanwhile, IPARK Hyundai Development Company, a construction subsidiary, is projected to show a marked improvement in sales in the second half compared to the first half, which will in turn significantly boost profits.

In addition, IPARK Mall, which operates shopping malls, is expected to maintain solid profitability. HDC Hyundai EP, the petrochemical affiliate, is forecast to continue its sales growth; HDC Labs, the IT services unit, is likely to strengthen profitability; and IPARK I & Cons, the development company, is transitioning to a development-focused business structure. Altogether, these entities are expected to reinforce the group’s overall profit-generating capacity.

Earnings forecasts have also been raised significantly. Hanwha Investment & Securities expects HDC's operating profit for this year to reach 994 billion won, up 53.2% from 649 billion won in the previous year. Next year's operating profit is projected at 1.196 trillion won, an increase of 20.4% from this year. Net profit attributable to controlling shareholders is expected to reach 543 billion won this year, an 80.4% increase from the previous year, and to remain robust at around 549 billion won next year.

Song also highlighted that a new momentum is needed to help the stock move out of its undervalued phase. She commented, "In the medium- to long-term, an increase in dividends can be expected based on solid subsidiary earnings, and there is growing discussion of new investments to further diversify business operations." She added, "Furthermore, how the company utilizes or disposes of its treasury shares (17.1% of total shares) is likely to become a critical factor in raising future corporate value."

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