South Korea's Hanwha Aerospace to spin off industrial solutions businesses from defence

economictimes.indiatimes.com:

Hanwha Aerospace said on Friday it will spin off its semiconductor equipment and video surveillance businesses, carving out units that contributed about 16% to revenue in favour of focusing on its flagship defence division.

The announcement sent the firm's share price down 8% in morning trade on profit-taking. The stock had jumped on Tuesday by more than 15% after local media reported the spin-off plan.

Hanwha Aerospace said it will spin off chip equipment maker Hanwha Precision Machinery and surveillance camera maker Hanwha Vision, with the two businesses eventually merging into a single industrial solutions company.

That new entity would be worth about 2 trillion won ($1.48 billion), while the defence business would be worth 10 trillion won, showed estimates from Shinhan Securities.

Hanwha Aerospace's market capitalisation on Friday morning was a shade lower than those figures combined, at about 11 trillion won.

«This will help us overcome the valuation discount due to the mixture of defence business and Hanwha Vision, Hanwha Precision Machinery,» Hanwha Aerospace said in a conference call explaining the plan.

«Hanwha Precision's high-growth chip equipment business can expand with solid cash flow from Hanwha Vision,» including developing equipment used to make high-bandwidth memory (HBM) chips used in artificial intelligence (AI) chipsets, it said.

Hanwha Aerospace said it will continue to develop its defence business spanning land, sea, air and space with shipbuilder Hanwha Ocean and network system