KOSPIHolding Companies000240

Hankook & Company

₩25,450▲ 1.39%2026-10-02 close

Market Cap

₩2.4T

Turnover

₩800M

Volume

30,000 shares

Shares out.

94.9M

PER

5.9×

PBR

0.4×

EPS

₩4,167

Dividend Yield

4.48%

PER, EPS, PBR and BPS are calculated in-house from the last 4 quarters (2025Q3–2026Q2) · Dividend yield is based on ₩1,100 per share · Prices as of the 2026-10-02 close

Report overview

Record Affiliate Profits, Tariff Headwinds in Own Battery Business

Equity-method income from the tire and thermal-management affiliates is lifting reported profits, while the company's own lead-acid battery (ES) division has stepped back on US tariffs and higher input costs, tilting the holding company's earnings mix toward affiliates.

1
Second-quarter 2026 revenue was KRW 339.6bn (slightly lower year on year), operating profit KRW 100.1bn and net profit attributable to owners KRW 95.7bn; much of the profit growth came from equity-method income at affiliates.
2
The ES division's second-quarter 2026 revenue fell 17% and operating profit 57% year on year, as reported by IB Tomato in August 2026; the company cited tariff-driven order declines in the US and higher sub-material prices.
3
The Clarksville, Tennessee battery plant is being expanded from about 1.4 million units a year toward 3 million (Korea Economic Daily, November 2025), and orders for the added capacity are reported to be largely allocated.
4
Under a policy of paying out at least 50% of adjusted EBITDA, the interim dividend has risen for three consecutive years, with the 2026 interim payout totaling KRW 31.3bn, up 10% year on year; still, management said on its earnings call it was cautious about fixing this year's payout size and ratio.
5
Chairman Cho Hyun-bum resigned as an inside director in February 2026 and the company moved to a dual-CEO structure, yet governance variables remain, including his 42.03% controlling stake and friction involving a minority shareholder coalition and family members.

Business structure

Hankook & Company is the group holding company created when the investment arm of the former Hankook Tire was spun off and relisted in 2012; in 2021 it merged with Hankook AtlasBX to create the Energy Solutions (ES) division, shifting from a pure holding company to an operating holding company.

Its income streams comprise battery manufacturing and sales, management advisory, real estate leasing, trademark royalties and equity-method gains.

The ES division makes automotive and industrial lead-acid batteries and, according to a February 2026 Today Shinmun report, accounted for 71.1% of total revenue in the prior year, serving as the cash generator.

Its product range spans premium AGM (Absorbent Glass Mat), EFB and MF batteries, with combined annual capacity reported at about 15 million units across the Daejeon and Jeonju plants in Korea and the US plant in Tennessee (Korea Economic Daily, November 2025).

Sales reach roughly 450 customers in about 100 countries including the US and Europe, and the company highlights that it is the only Korean lead-acid battery maker with a local US production base.

The holding side centers on its stake in tire affiliate Hankook Tire & Technology (reported at 31.15% as of May 2025) and on thermal-management maker Hanon Systems, whose acquisition closed in January 2025, so affiliate results flow directly into holding-company profits via equity-method income and royalties.

Competitively, the company vies with global and domestic battery makers for aftermarket replacement demand, and analysts note that longer battery life and quality improvements have lengthened replacement cycles, slowing domestic sales.

On governance, Chairman Cho Hyun-bum is the largest shareholder with 42.03%, with friendly holdings of roughly 47.25% including related parties; after his resignation as inside director in February 2026, the company split management and business oversight between co-CEOs Kim Joon-hyun and Park Jong-ho.

Earnings trend

Quarterly revenue · Operating profit

₩343.8B₩73.9B25Q2₩384.7B₩137.1B25Q3₩340.4B₩73.8B25Q4₩378.4B₩121.7B26Q1₩339.6B₩100.1B26Q2

RevenueOperating profit

Annual revenue · Operating profit

₩1.1T₩245.2B2022₩1.1T₩256.6B2023₩1.4T₩418.3B2024₩1.5T₩411.6B2025

RevenueOperating profit

Quarterly results · Last 5 quarters
Quarter	Revenue	Operating profit	Op. margin
2025Q2	₩343.8B	₩73.9B	21.5%
2025Q3	₩384.7B	₩137.1B	35.6%
2025Q4	₩340.4B	₩73.8B	21.7%
2026Q1	₩378.4B	₩121.7B	32.2%
2026Q2	₩339.6B	₩100.1B	29.5%

Annual results
Year	Revenue	Operating profit	Net income (parent)	Op. margin	ROE	Debt-to-equity
2022	₩1.1T	₩245.2B	₩163.9B	22.4%	4.2%	11.5%
2023	₩1.1T	₩256.6B	₩187.2B	23.5%	4.7%	15.5%
2024	₩1.4T	₩418.3B	₩350.7B	30.1%	7.9%	15.4%
2025	₩1.5T	₩411.6B	₩347.2B	28.2%	7.3%	10.0%

Consolidated basis (financial statements including subsidiaries) · Final figures from DART filings · Net income attributable to owners of the parent · Data as of 2026-09-04

Earnings analysis

On an annual basis, revenue rose from KRW 1,095.9bn in 2022 and KRW 1,089.7bn in 2023 to KRW 1,391.0bn in 2024, up more than 27%, then added 4.8% to KRW 1,457.6bn in 2025.

Operating profit expanded from KRW 245.2bn in 2022 and KRW 256.6bn in 2023 to KRW 418.3bn in 2024 before easing to KRW 411.6bn in 2025, with operating margin tracking 22.4%, 23.5%, 30.1% and 28.2%.

Net profit attributable to owners likewise stepped up from KRW 163.9bn in 2022 to KRW 350.7bn in 2024 and KRW 347.2bn in 2025, holding at the higher level.

Because equity-method income sits inside holding-company operating profit, margins in the high-20s to low-30s reflect affiliate results rather than the manufacturing margin of the company's own operations.

Quarterly figures are volatile: operating profit was KRW 137.1bn in 3Q25 (revenue KRW 384.7bn), KRW 73.8bn in 4Q25 (revenue KRW 340.4bn), KRW 121.7bn in 1Q26 (revenue KRW 378.4bn) and KRW 100.1bn in 2Q26 (revenue KRW 339.6bn), as margins swung with the timing of affiliate profit recognition.

In the second quarter of 2026 revenue slipped 1.2% year on year while operating profit rose 35.6% and net profit attributable to owners jumped 69.3% from KRW 56.5bn to KRW 95.7bn, lifting the operating margin from 21.5% to 29.5%; the company and press attributed this to higher equity-method income on Hankook Tire & Technology's volume growth and favorable currency effects.

The own business moved the other way: ES division revenue fell 17% and operating profit 57% in the quarter, reflecting a base effect from US distributors pre-stocking ahead of tariffs last year plus higher sub-material prices.

Cash generation has improved, with operating cash flow rising from KRW 31.5bn in 2022 and KRW 41.8bn in 2023 to KRW 133.3bn in 2024 and KRW 235.7bn in 2025, while total liabilities fell from KRW 683.6bn in 2024 to KRW 478.5bn in 2025, taking the debt-to-equity ratio down to 10.0%.

Over the latest four quarters (3Q25 to 2Q26), revenue totaled roughly KRW 1,443.1bn, operating profit about KRW 432.7bn and net profit attributable to owners about KRW 395.6bn.

Industry analysis

Automotive lead-acid batteries remain necessary even in electric and hybrid vehicles to power low-voltage electronics, and the industry's core thesis is that the spread of idle stop-and-go (ISG) systems raises demand for higher-performance units able to withstand frequent restarts.

Within that mix, AGM carries a higher unit price than standard MF batteries, so a rising AGM share supports average selling prices and profitability. On market size, the company has said US battery demand reaches about 100 million units a year and set a goal of gaining share through expanded local production.

In the first half of 2026, however, North American orders were pushed back by tariff policy and distributor inventory adjustment; analysis suggests US shipment volumes were little changed from a year earlier, so order timing rather than genuine demand contraction was the main driver.

Domestically, better product quality and longer service life have stretched replacement cycles, slowing sales, leaving growth more dependent on overseas aftermarket demand and premium mix.

The tire cycle to which the holding segment is exposed is more favorable: Hankook Tire & Technology posted second-quarter 2026 consolidated revenue of KRW 5,682.4bn and operating profit of KRW 559.0bn, up 58.1%, with a 17.2% operating margin in the tire segment.

Drivers cited include expanded original-equipment supply centered on Europe and China plus replacement demand as electric-vehicle tires in China reach their change cycle.

Hanon Systems, the thermal-management arm, reported second-quarter 2026 revenue of KRW 2,875.2bn and operating profit of KRW 103.7bn while swinging to a net profit, broadening the holding segment's earnings base.

Outlook

The centerpiece of the company's stated recovery path for its own business is expanded US production.

A plan to lift capacity at the Clarksville, Tennessee plant from about 1.4 million units a year to 3 million in response to tariffs was reported in November 2025, and in early 2026 the company reportedly received requests for additional AGM volume from a North American customer, deciding to serve them from the new capacity while also winning new accounts.

IB Tomato reported in August 2026 that most orders for the September-October added capacity had been allocated and that the company was discussing combined AGM and MF supply with major European customers to reduce North American dependence.

On mix, the AGM share of production is targeted above 20% this year, making post-expansion utilization and mix improvement the key swing factors for ES margins.

Jang Moon-soo of Hyundai Motor Securities said in an August 2026 report that AGM growth was continuing despite lower volumes and that supply from the Tennessee expansion plus new customers should gradually offset tariff-related order declines, adding that ES capacity expansion and normalization of the Tennessee plant would determine future profitability.

On shareholder returns, the policy of funding dividends with at least 50% of adjusted EBITDA from the ES division and the holding segment (excluding equity-method income) remains in place and the interim dividend has risen three years running, but management said on its earnings call it was cautious about fixing this year's payout size and ratio, leaving recovery in internal cash generation as a variable.

At the affiliate level, Hankook Tire & Technology has laid out a medium-term policy to raise its payout ratio from about 20% in 2025 to as much as 35% by 2027, which feeds the holding company's dividend income.

On governance, the company moved to professional co-CEOs, cut the director remuneration cap from KRW 7.0bn to KRW 5.0bn and created a compensation committee, framing affiliate value enhancement and sustainable shareholder returns as its core tasks.

Valuation

PER

5.9×

PBR

0.4×

ROE

8.3%

EPS

₩4,167

BPS

₩54,770

Dividend per share

₩1,100

The multiples start from the structure typical of a holding company: because a large share of profit comes from equity-method income at affiliates plus trademark and dividend income, the market has customarily applied a discount to net asset value, and the shares indeed trade well below book value per share, with a price-to-book ratio under one.

The earnings-based multiple also sits on the low side versus the KOSPI average, partly reflecting that profits over the latest four quarters have held at a higher level than in the past on strong affiliate results.

The dividend yield tends to run above the KOSPI average, supported by a policy of using at least 50% of adjusted EBITDA as the payout source and three consecutive years of higher interim dividends.

That said, management has signaled caution about fixing this year's payout size and ratio, so the durability of dividend-related metrics depends on a recovery in the ES division's own EBITDA.

In short, a discount to net assets and a comparatively high dividend yield sit on one side, while weakness in the own business and governance and legal issues sit on the other, and these are best read alongside the live multiples shown at the top of the screen.

PER, EPS, PBR and BPS are all calculated in-house (the same method as Naver and Toss) · Dividend yield = cash dividend per share from DART filings (supplemented by KRX) ÷ current price · As of 2026-09-04

Bull factors

Stronger affiliate earnings feeding royalties and dividends

Hankook Tire & Technology posted second-quarter 2026 consolidated operating profit of KRW 559.0bn, up 58.1% year on year, with its tire segment reporting record quarterly revenue.

Hanon Systems also delivered KRW 103.7bn of operating profit in the same quarter and swung to a net profit, broadening the holding segment's earnings base.

This flows straight into holding-company results through equity-method income and trademark royalties, and net profit attributable to owners duly rose from KRW 56.5bn to KRW 95.7bn in the second quarter of 2026.

AGM mix upgrade and a local US production card

The company says it is the only Korean lead-acid battery maker with a local US production base, and its Tennessee plant is being expanded from about 1.4 million units a year to 3 million.

In early 2026 it decided to meet a North American customer's request for additional AGM volume from that new capacity, and orders for the September-October increment are reported to be largely allocated.

AGM carries a higher unit price than MF, so a rising AGM share supports average selling prices and margins, and the company has targeted an AGM production share above 20% this year.

Balance-sheet capacity and a record of rising dividends

Operating cash flow rose from KRW 41.8bn in 2023 to KRW 133.3bn in 2024 and KRW 235.7bn in 2025, while total liabilities fell from KRW 683.6bn in 2024 to KRW 478.5bn in 2025, taking the debt-to-equity ratio down to 10.0%.

Dividends operate under a policy of using at least 50% of adjusted EBITDA, and total interim payouts rose for three straight years, from KRW 19.9bn in 2024 to KRW 28.4bn in 2025 and KRW 31.3bn in 2026.

Hankook Tire & Technology's medium-term plan to raise its payout ratio to as much as 35% by 2027 also feeds the holding company's dividend income.

Bear factors

Weak own business and tariff uncertainty

The ES division's second-quarter 2026 revenue fell 17% and operating profit 57% year on year, and was cited as the main reason overall results came in below market expectations. Management attributed this to fewer US-bound orders under American tariff policy and to higher sub-material prices amid geopolitical conflict.

Pre-stocking by distributors last year created a base effect that reduced first-half orders, and further shifts in the tariff environment could repeat such distortions in order timing.

Profit dependence on affiliates and the holding-company discount

Operating margins in the high-20s to low-30s reflect the inclusion of equity-method income rather than a manufacturing margin, making earnings quality hard to separate from the affiliate cycle. In the second quarter of 2026, the margin rose from 21.5% to 29.5% on affiliate profit growth alone even as revenue declined.

Should the tire cycle turn or currency effects reverse, margins can retrace by the same route, and this structure has long been cited as a reason for the discount to net assets.

Uncertainty over the dividend funding base

Because the dividend funding policy is tied to adjusted EBITDA at the ES division and the holding segment (excluding equity-method income), ES weakness can mechanically shrink the funding pool.

On its earnings call the company said it was cautious about fixing this year's payout size and ratio, while stating its aim of maintaining a dividend level consistent with market expectations.

Jang Moon-soo of Hyundai Motor Securities likewise viewed rising affiliate value and stronger shareholder returns positively but said a recovery in ES division EBITDA was needed on the dividend funding side.

Risk factors

Policy and trade risk

The first half of 2026 demonstrated how changes in US tariff policy directly affect order timing and local distributor inventories. Expanding local production is a mitigant, but the early stages of a ramp-up can bring fixed-cost pressure and volatile utilization into reported results.

The company has said sub-material prices are influenced by geopolitical conflict, so input costs move alongside these factors.

Governance and legal risk

Chairman Cho Hyun-bum resigned as inside director and CEO in February 2026 but retains his 42.03% controlling stake, and in the same month a court annulled a past shareholder meeting resolution that had approved the director remuneration cap.

A minority shareholder coalition has pursued proposals such as broader director disqualification grounds and its own audit committee nominee, and there is discussion of family holdings, including former adviser Cho Hyun-shik's 18.93%, coalescing.

Depending on board composition and litigation outcomes, disputes over decision-making procedures could resurface.

Shifts in demand and competition

In Korea, better battery quality and longer service life have lengthened replacement cycles, which observers say has slowed sales. Demand for low-voltage batteries persists as eco-friendly vehicles spread, but intensifying competition is also flagged.

With growth concentrated in the North American and European aftermarket and in AGM mix, changes in the ordering policies of specific regional customers can amplify quarterly earnings volatility.

What to watch next

September-October 2026
Watch whether the Tennessee expansion (planned from about 1.4 million to 3 million units a year) starts up and whether the allocated orders are actually recognized as revenue. Early-stage utilization and fixed-cost absorption will steer the ES division's margin direction.
Mid-November 2026
In the third-quarter 2026 results, check whether the year-on-year declines in ES division revenue and operating profit narrow and how the contribution from equity-method income shifts. This is the first test of the gradual second-half recovery scenario management has described.
Early November 2026
Third-quarter results at Hankook Tire & Technology and Hanon Systems. Progress toward the full-year targets of a 51% high-rim-diameter tire share and a 33% electric-vehicle-specific tire share, plus thermal-management profitability, will set the size of next quarter's equity-method income.
December 2026 to February 2027
The year-end dividend resolution and disclosure of payout size and ratio. Key points are how the policy of using at least 50% of adjusted EBITDA is applied amid ES weakness, and how the caution management expressed on its earnings call is ultimately resolved.
Fourth quarter of 2026 onward
Governance events tied to the amended Commercial Act, including mandatory cumulative voting, any shareholder proposals from the minority coalition or family shareholders, and the progress of legal proceedings involving Chairman Cho Hyun-bum. Changes in board composition bear directly on how dividend and investment decisions are made.

Overall view

Hankook & Company is an operating holding company that combines its own lead-acid battery business with affiliate stakes and trademark income, and its two engines have recently been running in opposite directions.

The holding segment's contribution grew on Hankook Tire & Technology's 58.1% jump in second-quarter 2026 operating profit and Hanon Systems' swing to a net profit, so even with slightly lower revenue in that quarter, operating profit and net profit attributable to owners rose 35.6% and 69.3% respectively.

The ES division, by contrast, is reported to have seen revenue fall 17% and operating profit 57% in the same quarter on fewer US-bound orders under tariffs and higher sub-material prices.

The balance sheet has strengthened, with operating cash flow rising from KRW 41.8bn in 2023 to KRW 235.7bn in 2025 and the debt-to-equity ratio easing to 10.0%.

The things to watch from here are whether the Tennessee ramp-up and a larger AGM mix restore ES margins, and how the adjusted-EBITDA-linked dividend policy is set against the pace of recovery in internal cash generation.

At the same time, governance variables persist, including the 42.03% controlling stake, friction with the minority shareholder coalition and family members, and ongoing legal proceedings. This report is for information purposes only and contains no buy or sell recommendation and no target price.

Sources

Korea Exchange (KRX) — Prices · Market Cap · Volume
FSS electronic disclosure system (DART) — Financial statements · Dividend filings

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Report written 2026-09-05 · Data as of 2026-09-04

This content is AI analysis of market data and web search results, provided for information only. It is not a solicitation or recommendation to invest. Investment decisions and their consequences are the investor's own responsibility. Data may be delayed or contain errors.