1. What Happened? H1 2025 Earnings Overview
Hanshin Machinery reported sales of KRW 22.57 billion in H1 2025, a 9.3% increase year-over-year. However, the company’s operating loss widened to KRW -768 million, and operating cash flow deteriorated to KRW -1.326 billion.
2. Why These Results? Analyzing the Drivers
Sales growth was driven by strong performance in the machine tool wholesale business (30.28% increase). The widening operating loss is attributed to rising SG&A expenses outpacing sales growth. The high allowance for doubtful accounts (45.39%) also raises concerns about financial health.
3. What’s Next? Market Outlook and Investment Strategy
In the short term, declining profitability and worsening cash flow are expected to put downward pressure on the stock price. In the medium to long term, efforts to improve profitability, cost control measures, and the success of new business ventures will determine the company’s value. Growth in the wholesale segment and the potential for overseas expansion are positive factors, but recovery in the core business’s profitability is crucial.
4. What Should Investors Do? Key Metrics and Next Steps
- Conservative Observation: Closely monitor profitability and cash flow recovery.
- Key Metric Monitoring: Track operating margin improvement, SG&A expense control, and return to positive operating cash flow.
- New Business Visibility: Assess the concrete plans and results of new business ventures.
- Macroeconomic Factors: Monitor exchange rate fluctuations, raw material prices, and the global economic situation.
- Further Actions: Gather detailed information through communication with the company’s IR team and conduct a competitive analysis to evaluate Hanshin Machinery’s relative competitiveness.