Hanil Cement Co., Ltd. produces and sells cements, ready-mixed concretes, and admixtures. The company offers Hanil Remicon for construction sites; and dry mortar products under the Remitar brand name. It also exports its products. The company was founded in 1961 and is headquartered in Seoul, South Korea.

Korea

Hanil Cement Co., Ltd.

Basic Materials

The company pays dividends most of the time. It has paid dividends in almost every one of the past ten years. Dividend per share (DPS) has grown yearly, and there is an evident trend. In the past 12 months, the dividend yield has been outstanding and can be rated excellent compared to its peers. At the same time, the average five-year yield has been significantly higher and exceeded most of its peers. On average, the company pays dividends annually. 

300720.KS reported revenue of KRW 1 741 671mn in the last 12 months, down 3% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS grew 8% from FY23 to KRW 2 657.96. Market expects EPS to reach KRW 2 992.00 in FY25.

The stock has been growing steadily in the past six months, adding 28% in total. The stock has outperformed its global peers from the same sector and industry (as shown above), surpassing them by 30ppts in total. At the same time, the stock's performance relative to its the peers from the same country and sector is different. The stock outperformed these peers by 25ppts over the past six months and grew 7ppts faster in the past month. With respect to the stock's valuation against its peers, its overall price performance is 'fair'.

The company has reported average EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 21.1% in the last 12 months, up from 17.2% in FY23. 

Historically, 300720.KS has reported good net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 10.6%, a growth from 9.5% in FY23. 

Hanil Cement Co., Ltd. reported a return on equity (RoE) of 11.1% in the last 12 months, down from 11.2% in FY23. The market consensus projects an RoE of 12.4% in FY24, again ahead of its peers. 

Another important profitability metric, return on assets (RoA), amounted to 6.3% in the last 12 months, a decrease from 6.4% in FY23. The market analysts predict that RoA will be 7.0% in FY24, again stronger than its peers. 

In the last 12 months, the return on capital employed (RoCE) declined to 7.8%, above the peers. The consensus estimate for FY24 for RoCE is 12.3%, again ahead of the peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 1.5 in the past several years. This ratio implies a average shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are minimal. In combination with stringent business standards, shareholder rights are very highly protected.

300720.KS has below average trading liquidity. The average private investor can sell his common position in the stock in a single trading day. Liquidity is unstable and becomes extremely unfavourable on the days with the lowest activity. The trading volume mostly stays the same even under highly turbulent market conditions. The stock has a small market capitalisation, which usually makes its trading liquidity erratic and unpredictable. 

No other major risks have been identified.

The risk of default is moderate. We note adequate interest coverage, solid cash flow generation, and an favourable capital structure, among the positive credit factors. Among the negative credit factors and we point to weak positions in its industry, poor working capital management.

In highly turbulent market conditions, 300720.KS is as volatile as an index. In other words, the stock will move with the index in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be limited. 

In normal market circumstances, 300720.KS is moderately volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will move slightly wider than the index. The stock's losses on its worst days (less than 1-5% of the time) will range from limited to mild. 

From both historical and forecast perspectives, the stock is moderately underpriced compared to similar stocks. Specifically, the stock is 'cheap' on P/E, undervalued on EV/EBITDA, overpriced on P/FCF. 

Hanil Cement Co., Ltd.

₩ 18840

5

Hanil Cement Co., Ltd.

₩ 18840

5

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

₩ 18840

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