Hanwha shares surge on hopes of successful Daewoo Shipbuilding purchase

Daewoo Shipbuilding & Marine Engineering Co. headquarters, left, and Hanwha Group headquarters [Photos sources: MK DB, Hanwha Group]

Shares of Hanwha Corp., the holding company of Hanwha Group, rose the most in more than two years Wednesday on expectations of a successful acquisition of Daewoo Shipbuilding & Marine Engineering Co.

Shares jumped 15 percent to close at 30,150 won ($22.69) Wednesday, the biggest gain since Jan. 21, 2021. The rally is unusual for a holding company whose stock price usually experiences minimal fluctuations.

The acquisition was made by Hanwha’s five subsidiaries rather than the holding company itself, but there is expectations that the parent’s value will increase due to potential synergies, said a securities company official.

The acquisition deal was signed in December 2022 and it is currently undergoing various regulatory procedures for approval from authorities in Korea and abroad.

Another reason for the surge in Hanwha’s stock price is that the company is believed to be undervalued compared with other holding companies.

Shares of Hanwha’s subsidiaries have risen significantly in the past year due to expectations of growth in the defense industry. Hanwha Aerospace Co. gained 102 percent from a year ago, Hanwha Solutions Corp. 62 percent and Hanwha Systems Co. 42 percent. In contrast, Hanwha Corp. fell by 3.27 percent during the same period.

According to Yuanta Securities Co., Hanwha Corp. had the lowest price-to-earnings ratio of 2.3 times at the end of last month based on expected net profit among 17 major holding companies in Korea. Its price-to-book ratio was also the second lowest at 0.4 times after 0.3 times of GS Holdings Co.

The market expects Hanwha Corp.’s operating profit in the first quarter to reach 522 billion won, up 12 percent from a year ago.