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| Lee In-young Hanon Systems CEO |
Securities firms are rushing to raise their outlook for Hanon Systems as the air-conditioning and heating systems for vehicles manufacturer is riding high on the booming electric and other eco-friendly car markets.
Eugene Investment & Securities issued a report Monday, saying it is increasing its target price for Hanon Systems, headed by CEO Lee In-young, to 15,000 won per share from the previous 13,000 won, citing its robust sales growth in the eco-friendly vehicle segment.
"The firm's sales of air-conditioning and heating systems for electric and other environment-friendly cars will jump by an annual average of 52 percent from this year through 2020," Eugene analyst Lee Jae-il said. "Now, Hanon Systems generates only 7 percent of its sales from the eco-friendly vehicle segment. But the ratio will increase to 20 percent by 2020."
With the global electric car market projected to grow 45 percent annually, Hanon Systems plans to raise the production of e-compressors, a key component of air-conditioning systems for electric vehicles, to 1.5 million from the current 400,000.
The firm, which manufactures most of its e-compressors at its plant in Pyeongtaek, Gyeonggi Province, plans to expand its plants in Portugal, China and the United States. It employs 16,500 people at its four research centers and 40 manufacturing sites in 19 countries.
"The global air-conditioning market for electric vehicles is dominated by Hanon Systems and a few other auto parts makers, equipped with technological prowess and price competitiveness," Lee said. "The company has an extensive track record of supplying air-conditioning systems for Ioniq and other electric vehicles manufactured by Hyundai and Kia. It is also better positioned than Denso, Toyota's auto parts affiliate, to secure new orders globally."
With Hyundai and Kia scheduled to introduce more electric vehicle models in the coming months, Hanon System's sales from this booming segment will continue to head upward.
"We have partnered with Hyundai and Kia, enabling them to develop electric and other eco-friendly cars," a Hanon Systems official said. "We will also work hard to expand our partnership with other carmakers here and abroad."
On Monday, Hanon Systems stock rose 1.67 percent, or 200 won, to 12,200 won per share from last Friday, while the benchmark KOSPI fell 8.21 points, or 0.35 percent, to close at 2,370.3.
In the second quarter of this year, the company earned 1.37 trillion won in sales, down 7.9 percent from the previous year. But its operating profit rose 8.1 percent to 103 billion won, thanks to soaring sales of air-conditioning systems and other auto parts for electric and other energy-efficient cars.
Hanon Systems, formerly known as Halla Visteon Climate Control Corp. is controlled by Hahn & Company, a private equity fund, which holds a 50.5 percent stake. Hankook Tire also holds a 19.49 percent stake, with the remaining shares being floated on the main KOSPI market.
In December 2014, the two domestic companies acquired their stakes from Visteon for 4 trillion won. Hanon Systems is Korea's largest air-conditioning and heating systems maker and the world's third-largest, after Denso and Valeo.
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