Hanon Systems makes thermal-management (climate-control) parts that regulate cabin heating and cooling and the temperature of the battery and motor inside a vehicle. Compressors, heat exchangers, pumps and valves, along with heat pumps and integrated thermal-management systems (ITMS) for EVs, are its mainstays; with annual revenue of about ₩11 trillion it ranks second worldwide in this field, and the share of electrified (xEV) parts is on the verge of crossing 30%. Provisional Q1 2026 results on April 30 confirmed revenue of ₩2.7482 trillion, operating profit of ₩97.2 billion (+361%), and a swing to net profit; on May 12 an intra-group absorption merger with no new-share issuance simplified the business structure without dilution, while April brought disclosures of a corporate-bond issuance to manage debt and interest burden. What stands out lately is that as the world's number two in thermal management, a growth field where per-vehicle content is rising, the operating margin is settling into the 3% range and, assuming earnings normalize, the valuation is not heavy; yet a debt ratio of 278.5% and interest coverage below 1x, restructuring costs, and shifts in customers' EV strategies all need to be watched together.
At-a-glance assessment financial health · growth · profitability · valuation
- Debt is somewhat higher than equity (debt ratio 278.5%).
- Operating profit barely covers the interest bill (interest coverage below 1x).
- The most recent full-year net result was a loss.
- Revenue rose 8.8% year over year, and the pace is quickening (3-year trend: rising).
- Most recent quarter (Q1 2026) revenue was 5.0% higher than a year earlier.
- ROE is -5.3% (controlling-interest basis). It is below the sector average.
- Operating margin is 2.5%.
- The forward P/E sits above the sector median, reflecting elevated expectations.
Ownership & governance As of 2025-12-31
Largest shareholder Hankook Tire & Technology 51.07% (corporate)
Controlling bloc incl. related parties 51.09%
With the controlling bloc holding 51%, control is very secure but the free float is thin.
🔎 In-depth analysis
- Hanon Systems makes and sells thermal-management (climate-control) parts that regulate cabin cooling and heating and the temperature of the battery and motor inside a vehicle.
- Its mainstay products are compressors that pressurize the air-conditioning refrigerant, heat exchangers that transfer heat, pumps and valves that circulate coolant, and heat pumps and integrated thermal-management systems (ITMS) that extend an EV's driving range.
- Because an EV needs its battery kept at a steady temperature to improve range and lifespan, thermal-management parts go in more and at higher value per vehicle.
- Revenue runs at about ₩11 trillion a year, second worldwide in automotive thermal management, and the share of electrified (xEV) parts for EVs and hybrids rose from about 28% in 2025 to about 29% in Q1 2026, nearing a break above 30%.
- Its main customers are global automakers such as GM, Hyundai Motor, and Ford, and from 2025 it was folded into the Hankook & Company Group as a subsidiary, taking on a core business pillar of the group.
- The latest close is ₩3,570 and market cap is ₩3.7 trillion.
- The price sits below its 20-day line (₩4,147) and below its 60-day line (₩4,487).
- Trading below both its short- and mid-term moving averages, the trend is on the soft side.
- RSI (an auxiliary gauge weighing the strength of gains against losses over the past 14 days on a 0-100 scale) is 37.3, a neutral level.
- The one-month change is -17.4%, the three-month change is -4.0%, and the position versus the 52-week high is -37.7%.
- Relative strength versus the KOSPI is 37 (1-99, recent one-year return against the index recency-weighted; higher means stronger than the market).
- That places it in roughly the top 63% of all stocks by strength.
- Over the past three months it lagged the index by 27.2%.
- Chart reading is best done alongside trading volume and disclosure dates.
- Starting with valuation metrics, the P/B (how many times net asset value the price represents) is 0.97x and the P/S (how many times revenue the price represents) is 0.37x.
- The P/E ratio (how many times one year's earnings the price represents) cannot be computed because last year's earnings per share were negative at -₩193.5.
- That loss, however, was not because the business is bad but the result of overlapping one-off factors: interest costs, impairment of R&D assets from Ford's and GM's EV-lineup cuts, and restructuring provisions.
- Operations themselves are recovering, with the operating margin (operating profit as a share of revenue) rising into the 3.4-3.5% range from the second half of 2025.
- The weak link to watch on the balance sheet is that the debt ratio (debt versus equity) is high at 278.5% and interest coverage (how many times operating profit can cover interest) is below 1x, so a structure where interest burden eats into profit still remains.
- In short: profitability is clearly turning up, while balance-sheet soundness is a task for improvement.
- The top line is steady.
- Revenue grew from ₩7.4 trillion in 2021 to ₩10.9 trillion in 2025, a five-year annual average of about 10%, and in 2025 it grew 8.8% year over year — the growth pace actually quickening.
- Earnings, by contrast, swung sharply.
- Operating profit, pressed to ₩95.5 billion in 2024, rebounded 183% to ₩270.4 billion in 2025, then rose 361% year over year to ₩97.2 billion in Q1 2026.
- Net profit was negative for two straight years — -₩363.3 billion in 2024 and -₩198.5 billion in 2025 — but this owed to the one-off impairment, restructuring, and interest factors noted above.
- Decisively, net profit swung to a ₩67.5 billion profit in Q1 2026.
- With most of the impairment recognition now past and the operating margin settling into the 3% range, this year points to net profit reaching a profit track on a full-year basis too.
- The company set official 2026 targets of ₩11 trillion in revenue and a 5% operating margin, underpinned by firm demand for ITMS, where per-unit prices of electrified parts are more than double those of internal-combustion parts.
- The loss-based P/E through last year therefore does not show the company's true earnings power, and this is a stock to re-evaluate on forward-looking earnings.
- The most important signal is the provisional Q1 results released via fair disclosure on April 30, 2026.
- Revenue of ₩2.7482 trillion, operating profit of ₩97.2 billion (+361%), and a swing to net profit confirmed in figures the profitability recovery underway since the second half of 2025, and it was finalized in the May 14 quarterly report.
- On May 12 the company disclosed a decision on an intra-subsidiary absorption merger, a management-efficiency measure combining a wholly owned subsidiary with no new-share issuance, simplifying the business structure without dilution.
- In April, disclosures related to a debt-security (corporate bond) issuance followed — funding activity to manage the high debt ratio and interest burden, a point to keep watching.
- On May 29 an IR session and a governance report were also disclosed, which the company used as an official channel to explain its electrification share and balance-sheet-improvement progress directly.
- The observation points are clear.
- Strengths: (1) It is the world's number two in thermal management, a growth field where per-vehicle content rises in the EV era, with the electrification revenue share approaching 30%.
- (2) An earnings inflection, as the operating margin settles into the 3% range, 2025 operating profit rebounds sharply, and Q1 2026 net profit swings positive.
- (3) As a result, earnings that were uncomputable due to last year's loss now have room to be priced at a multiple even lower than large peer suppliers when viewed forward.
- The company's official targets (₩11 trillion revenue, 5% operating margin) support this direction.
- Conversely, points to note: (1) With a debt ratio of 278.5% and interest coverage below 1x, balance-sheet soundness is still a task.
- (2) Restructuring-related costs, including headcount cuts, may be recognized further during 2026, so the pace of net-profit recovery can be uneven quarter to quarter.
- (3) Shifts in customers' EV strategies, such as at Ford and GM, affect volumes and impairment recognition.
- In sum, the operating direction is clearly recovering and the valuation is not heavy assuming earnings normalize, but a phase to watch alongside the balance-sheet burden and any remaining one-off costs.
🔎 Valuation vs peers Fairly valued
Compared with large domestic auto-parts makers that supply automakers directly and have similar scale and global-customer structure (Hanon Systems specializes in thermal management, HL Mando in braking/steering/ADAS, Hyundai Wia in driveline/machine tools).
| Peer | P/E | P/B | ROE |
|---|---|---|---|
| HL Mando | 22.70x | 0.84x | 3.69% |
| Hyundai Wia | 16.31x | 0.45x | 2.74% |
Because last year's net profit was a loss, the trailing P/E is uncomputable, but given that much of that loss came from one-offs such as impairment and restructuring, it is hard to call it over- or undervalued on last year's earnings alone. On forward-looking earnings (Q1 swing to profit, operating margin settling into the 3% range, the company's official 5% target), Hanon's forward multiple falls into a range below the current multiples of HL Mando (P/E 22.6x) and Hyundai Wia (P/E 17.7x). The P/B of 1.03x looking higher than peers (0.5-0.8x) is largely because the past two years' impairment and losses shrank book equity, so it is hard to call it expensive on capital metrics alone. Weighing growth (thermal management, EV benefit) against balance-sheet burden (high debt), the current valuation is judged to be in a 'fairly valued' range — neither heavy nor a bargain.
Earnings outlook company-stated · verified
| Type | Period | Revenue | Operating profit | Net profit |
|---|---|---|---|---|
| This year | 2026 | approx. ₩11 trillion | operating margin 5% | — |
Price history Close · MA20 · MA60
The latest close is ₩3,570 and the market capitalization is ₩3.7 trillion. The price sits below its 20-day moving average (₩4,147) and below its 60-day moving average (₩4,487). It is under both its short- and medium-term moving averages, so the trend looks subdued. The RSI (a supplementary indicator that gauges the strength of gains versus losses over the past 14 days on a 0-100 scale) is 37.3, a neutral level. The one-month change is -17.4%, the three-month change is -4.0%, and the position relative to the 52-week high is -37.7%. Relative strength versus the KOSPI is 37 (on a 1-99 scale, converted from returns against the index over the past year with more weight on recent performance; higher means stronger than the market). It is stronger than roughly 37% of all stocks. Over the past three months it lagged the index by 27.2%. Chart interpretation is best done alongside trading volume and the dates on which disclosures occur.
Relative performance stock vs index · start = 100
Excess return vs index · 3M -27.22% / 6M -25.65% / 12M -54.73%
Key metrics vs sector median
Valuation
A net loss makes the P/E an unreliable valuation gauge. The P/B of 0.97x is above the sector median (0.56x).
Enterprise value (EV)
EV = market cap + net debt. It reflects cash and debt, so it captures the real cost of the whole business that market cap alone misses; lower multiples are cheaper relative to earnings or sales.
Intrinsic value (DCF estimate)
DCF (discounted cash flow) estimate — discount rate 9.8%, initial growth 4.0%→terminal 2.0%, 10-yr forecast, earnings-based. A reference range that shifts materially with assumptions.
Profitability & financials
Return on equity (ROE) is -5.3%, below the sector average (7.0%). The operating margin is 2.5%. The debt ratio is 278.5%, so the financial structure is somewhat high.
Growth FY2025 · annual report (consolidated)
| Item | 2023 | 2024 | 2025 | YoY |
|---|---|---|---|---|
| Revenue | $6.3B | $6.6B | $7.2B | +8.85% ↑ faster |
| Operating profit | $188.0M | $63.3M | $179.2M | +183.00% ↑ faster |
| Net profit | $33.8M | -$240.8M | -$131.6M | — |
| 5-year | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Revenue | $4.9B | $5.7B | $6.3B | $6.6B | $7.2B |
| Operating profit | $215.9M | $170.1M | $188.0M | $63.3M | $179.2M |
| Net profit | $204.5M | $13.5M | $33.8M | -$240.8M | -$131.6M |
| Revenue CAGR | 4-yr avg 10.31% | ||||
Revenue rose 8.8% year over year (2023 ₩9.5 trillion → 2024 ₩10.0 trillion → 2025 ₩10.9 trillion), and the three-year trend is 'rising'. The pace of growth also quickened from the prior year. Operating profit rose 183.0% year over year. Profit is growing at an accelerating pace. Over the 5 years on record, revenue compound annual growth (CAGR) is 10.3%. The two-year revenue CAGR is 6.9%. In the most recent quarter (Q1 2026), revenue was 5.0% higher than the same period a year earlier.
Latest quarterly results Q1 2026 · vs year-ago
Technical indicators
What stands out
- —
Points to watch
- Debt is somewhat higher than equity (debt ratio 278.5%).
- Operating profit barely covers the interest bill (interest coverage below 1x).
- The most recent full year was a loss, so it is worth checking whether profitability recovers.
- The price is high versus peers, so expectations already appear priced in.
Recent news & events searched · sourced
- 2026-04-30EarningsQ1 2026 consolidated provisional results (fair disclosure) — revenue ₩2.7482 trillion, operating profit ₩97.2 billion (+361% year over year), swing to net profit.Short term: an earnings-inflection signal with profitability recovery confirmed in figures. Mid term: grounds for a full-year profit track if the operating margin settles into the 3% range. Source
- 2026-05-12FilingDecision on an intra-subsidiary absorption merger — a management-efficiency and business-simplification measure combining a wholly owned subsidiary with no new-share issuance.Short term: neutral for shareholder value with no dilution. Mid term: room for cost efficiency from a simpler organization. A base adjustment is needed when comparing consolidated figures before and after the merger. Source
- 2026-05-14UpdateMarch 2026 quarterly report filed — Q1 financials, business status, and finalized results disclosed.Short term: finalizes the swing to profit and provisional figures. Mid term: primary material to verify balance-sheet items such as debt ratio and interest coverage directly. Source
- 2026-04-24UpdateDebt-security (corporate bond) issuance — disclosure of the securities-issuance performance report and prospectus — funding activity.Short term: securing liquidity. Mid term: a point to keep watching as it manages the high debt ratio and interest burden through refinancing and funding. Source
- 2026-05-29IRNotice of IR session and disclosure of the corporate governance report.Short term: an official channel to communicate the company's business and strategy (electrification share, balance-sheet improvement). Mid term: an opportunity to check progress on the ₩11 trillion revenue and 5% operating-margin targets. Source
Figure cross-check computed ↔ external
| Metric | Computed | External | Status | Source |
|---|---|---|---|---|
| Q1 2026 revenue | 2₩748.2 billion(base quarter revenue 2,748,243,841,130) | 2₩748.2 billion | Confirmed | link |
| Q1 2026 operating profit | ₩97.2 billion(base quarter op_income 97,180,265,146), +361% | ₩97.2 billion(+361%) | Confirmed | link |
| 2026 revenue target | 2025 revenue 10₩883.7 billion(base revenue) | approx. ₩11 trillion | Confirmed | link |
| Internal estimate of full-year 2026 net profit | approx. ₩230.0 billion(self-estimate) | — | Unverified | — |
Recent filings
- 2026-05-29Disclosure
- 2026-05-29Corporate governance report
- 2026-05-29Large-business-group status disclosure
- 2026-05-14PeriodicQuarterly report
- 2026-05-12Merger decision
- 2026-04-30EarningsFair-disclosure notice
- 2026-04-24Earnings disclosure
- 2026-04-24Disclosure
- 2026-04-23Disclosure
- 2026-04-20Disclosure
- 2026-04-20Amended filing
- 2026-04-15Disclosure
📖 Plain-language glossary — expand if you are new to this
- P/E
- How many times a year's net profit the price is worth (lower is cheaper relative to earnings). The P/E here is on trailing (last full-year) results; for companies whose earnings swing fast (memory chips and other cyclicals/high-growth), a forward P/E on this year's expected earnings is more accurate.
- P/B
- Price relative to net assets (equity). Around 1x means it trades near book value; below 1x means below book.
- P/S
- Price relative to a year's revenue — useful for growth companies with thin earnings.
- Net debt / EV
- Net debt = interest-bearing debt − cash. Negative means more cash than debt (net cash). EV (enterprise value) = market cap + net debt, closer to what it would cost to buy the whole business.
- EV/EBIT · EV/EBITDA · EV/Sales
- Enterprise value against operating profit (EBIT), EBITDA, or revenue. Unlike P/E these reflect debt and cash; lower is cheaper relative to earnings power or sales.
- FCF / FCF yield
- Free cash flow = operating cash − capex, the cash actually left over. FCF yield = FCF ÷ market cap; higher means more cash generated per unit of market value.
- Intrinsic value (DCF)
- Future free cash flow (or, for some capex-heavy but profitable names, forecast earnings) discounted to today to estimate per-share value. Because it shifts a lot with the discount-rate and growth assumptions, it is shown as a bear/base/bull range, and the basis and assumptions are disclosed in one line beneath it.
- ROE
- How much profit the company earns in a year on its equity (%). Higher means better returns on capital.
- EPS / BPS
- Earnings per share / net assets (book value) per share.
- Operating / net margin
- Profit left from the core business / final profit after tax and interest, per unit of revenue.
- Debt ratio
- Debt relative to equity (%). Higher means more reliance on borrowing (norms vary by sector).
- Current ratio
- Assets convertible to cash within a year against debt due within a year. Above 100% leaves some short-term headroom.
- Interest coverage
- How many times operating profit covers the interest owed. Below 1x means operating profit alone struggles to cover interest.
- Dividend yield / payout ratio
- The year's dividend as a % of today's price / the share of earnings paid out as dividends.
- Revenue CAGR
- Multi-year growth expressed as a single yearly average (compound annual growth rate).
- RSI (short-term signal)
- Whether recent price action is overheated or beaten down. Above 70 is overbought, below 30 oversold.
- MA20 / MA60 (moving averages)
- The 20- and 60-day average price. Price above them signals a firmer short-term trend.
- vs 52-week high
- How far below the past year's peak the price sits now (%).
All figures are for reference only; how they read varies by sector and over time.
Sources: Korea FSC market-price API (data.go.kr), OpenDART, KRX/KIND — public data only.
Bong Stocks presents public-data-based information for reference only. It is not investment advice and contains no target prices, ratings, or buy/sell recommendations. Verify independently before making any decision.