Actively Investing in New Business
The author is an analyst of NH Investment & Securities. He can be reached at jinmyung.choi@nhqv.com. -- Ed.
Hanwha Systems has announced that it will invest US$300mn to acquire an 8.8% stake in OneWeb. In total, the firm has now invested more than W500bn in its space development and air mobility businesses. We positively view the company’s efforts to actively invest in new businesses and secure new growth engines.
Announced plan for OneWeb investment
Hanwha Systems is pursuing new businesses with its recent capital increase of W1.2tn, while existing businesses are valued at about W2tn.
On Aug 11, the firm announced its first large-scale investment plan after its capital increase—it will acquire an 8.8% stake in OneWeb, a low-orbit satellite communication service company, for US$300mn. The company has also secured a share of the low-orbit satellite communication antenna market via its subsidiaries Phasor and KYMETA.
Existing businesses remain stable; preparing for new businesses through overseas venture investment
Hanwha Systems’ existing defense/ICT divisions are performing well, as expected. The defense division is unaffected by short-term economic changes, and it is likely to see stable growth thanks to the government’s policy of expanding the nation’s defense budget. The ICT division also continues to secure stable supplies from affiliates. In the process of preparing for new businesses, it seems that the company would prefer to invest in external firms rather than expanding capex.
Actively investing in new business
Hanwha Systems is actively investing in the space development and air mobility fields. The firm has already invested more than W500bn in new businesses, including the acquisition of a stake in OneWeb. As it recently completed a rights offering worth W1.2tn, and existing businesses continue to generate sound profits, similar M&A and equity investment news is expected in the future.