Complete Domestic Value Chain Will Unlock Renewable Dominance

Key Takeaways

• Unique fully domestic U.S. supply chain and new policy incentives position Hanwha to capture premium pricing and long-term contracts as competition weakens.
  
• Expansion into green hydrogen, advanced materials, and residential energy financing drives high-quality recurring revenues and multi-year, policy-driven growth across diversified markets.
  
• Production delays, margin compression, and rising debt, amid tough competition and cost pressures, threaten growth, profitability, and market position across key business divisions.

Catalysts

Operates in the chemicals, energy solutions, and advanced materials business areas in South Korea and internationally.

• While analyst consensus sees U.S. vertical integration and strategic manufacturing capacity as a margin and market share tailwind, this impact may be vastly understated-Hanwha's complete domestic value chain, from ingot to module, positions it as the only truly "made in America" provider as new protectionist rules and incentives come into effect, therefore capturing premium pricing and locking in long-term revenue contracts at higher margins as competition dwindles.
  
• Analysts broadly agree that TPO (third-party ownership) and residential energy financing models drive margin expansion and recurring high-quality revenues, but the market is underappreciating the scale of the coming shift-as cash/loan demand evaporates and new policies force adoption, Hanwha Solutions could rapidly achieve dominant U.S. market share and transform earnings growth through steadily compounding, annuity-like income streams.
  
• Hanwha's proven ability to resolve near-term cellular quality and supply chain issues, combined with the imminent ramp of U.S. Cartersville's fully integrated plant, sets it up to not only recoup volumes but also vastly outperform competitors amid supply disruptions and new trade barriers, enabling accelerated revenue and earnings recovery from 2025 onward.
  
• As funding costs drop and capital flows accelerate into renewable leaders, Hanwha's sizable investments in green hydrogen, advanced solar materials, and energy-efficient chemicals position the company to benefit from outsized inflows and premium valuation multiples, leading to significant bottom-line improvements and lower cost of capital well above current expectations.
  
• Regulatory-driven demand for low-carbon materials and tightening ESG mandates globally will give Hanwha's advanced materials and chemical divisions access to high-growth markets in mobility and construction, boosting diversification and multi-year expansion of high-margin revenue streams untapped by analyst consensus.

Hanwha Solutions Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on Hanwha Solutions compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Hanwha Solutions's revenue will grow by 18.9% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from -5.8% today to 8.0% in 3 years time.
• The bullish analysts expect earnings to reach ₩1820.6 billion (and earnings per share of ₩10435.66) by about September 2028, up from ₩-786.1 billion today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 6.1x on those 2028 earnings, up from -6.3x today. This future PE is lower than the current PE for the KR Chemicals industry at 13.2x.
• Analysts expect the number of shares outstanding to grow by 1.5% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 12.76%, as per the Simply Wall St company report.

Hanwha Solutions Future Earnings Per Share Growth

Risks

• Persistent delays and quality issues in the company's cell and module production-particularly at the Korean, Malaysian, and Cartersville plants-have led to downward revisions in shipment guidance and increased fixed costs, which could weaken future revenues and compress margins.
  
• The company's significant exposure to cyclical chemicals and petrochemicals, combined with weak market conditions and negative operating profits in its Chemicals division, poses a risk of ongoing margin compression and earnings volatility.
  
• High capital intensity from investment in new solar manufacturing capacity and renewable projects has resulted in rising net debt and increased debt ratios; continued financial leverage may put further pressure on future net profit and constrain growth investments.
  
• The shift to non-Chinese supply chains to comply with global trade policies and tariffs is driving up input costs; uncertainty around the ability to pass these costs onto customers could further erode net margins and weaken competitive positioning.
  
• Intensifying global competition, especially from low-cost Chinese solar and chemicals manufacturers and the threat of new technological innovations or regulatory requirements for sustainable materials, may erode market share and require costly reinvestment, negatively affecting both revenue and long-term profitability.

Valuation

• The assumed bullish price target for Hanwha Solutions is ₩43000.0, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Hanwha Solutions's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of ₩43000.0, and the most bearish reporting a price target of just ₩15000.0.
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be ₩22840.0 billion, earnings will come to ₩1820.6 billion, and it would be trading on a PE ratio of 6.1x, assuming you use a discount rate of 12.8%.
• Given the current share price of ₩28950.0, the bullish analyst price target of ₩43000.0 is 32.7% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.