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JONBUR Research · Update note

Hwaseung · 013520 · Auto parts

Hwaseung: Model Estimate Rises Sharply to ₩21,846 Per Share After Discount Rate Change

Why this report

Written after:

  • Model fair value changeModel estimate of fair value moved +1901% (₩1,092 → ₩21,846 per share)Oct 22, 2026

The model's base estimate for Hwaseung rose from ₩1,092 to ₩21,846 per share, a move of 1,901%, while the share price was ₩2,480 on 2026-10-20. The jump appears linked to a lower discount rate rather than new company results, so it should be read with caution.

Written Oct 21, 2026 · Data as of Oct 20, 2026 · 0 views

This is not financial advice. The report does not recommend buying or selling anything.

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What happened

On 2026-10-22 the model estimate of fair value was updated. The base case moved from ₩1,092 to ₩21,846 per share. The bear case stays at ₩0 and the bull case moved from ₩13,649 to ₩76,051.

The earnings base is unchanged: trailing twelve months to H1 2026, with revenue of ₩1,615.6B, operating income of ₩71.8B and net income of ₩74.1B. The one input that differs in the data is the discount rate, now 4.9% versus 7.5% before. No new company filing explains the change, and the filings listed since the initiation note are only changes in the largest shareholder's holdings and 5%+ holding reports. No news headlines are available.

What it changes for the thesis

The previous report (2026-10-18) described a company with recovered earnings and very low multiples, but said low multiples did not simply mean undervaluation, given flat revenue, liabilities at 191.3% of equity and a model estimate below the price. Those points are unchanged. Revenue fell 3.5% in 2025, and net income has exceeded operating income, which may reflect non-operating items that the data does not break down.

What changes is only the model output. Since the underlying earnings did not change, the thesis rests on the same facts as before: profitability must persist. Foreign ownership edged down to 6.9% from 7.3% over 60 days, and foreigners were net sellers over 20 days while retail investors were net buyers.

What it changes for the valuation

The model's updated estimate is a model estimate based on the assumptions shown: ₩0 bear, ₩21,846 base and ₩76,051 bull per share, from a 5-year discounted cash flow at 4.9%. The previous estimate was ₩0 bear, ₩1,092 base and ₩13,649 bull at 7.5%. The share price of ₩2,480 now sits below the base case, whereas before it was above it.

The move of about 20 times in the base case from a 2.6-point change in the rate shows how sensitive the model is to its assumptions. The range remains extremely wide, with a bear case of ₩0. Current multiples are P/E 1.7, P/B 0.4 and EV/EBITDA 4.3, with enterprise value of ₩509.0B. The previous note showed EV/EBITDA of 0.9 and enterprise value of ₩111.8B, so that figure has also been revised in the data. Borrowings are ₩473.0B against cash of ₩87.0B.

Closing view

The change is a revision of model inputs, not a new development at the company. The reversal from a base case below the price to one far above it says more about the model's sensitivity to the discount rate than about Hwaseung's business. Low multiples, a ROE of 28.9% and positive free cash flow of ₩77.5B remain, alongside flat revenue, meaningful leverage and a bear case of zero. The evidence is still mixed, and it depends on whether recent profitability persists and on which assumptions are judged reasonable.

Model estimate of fair value

Bear
₩0
-100%
Base
₩21,846
+838%
Bull
₩76,051
+3164%

Model estimate based on the assumptions shown. Not a price target and not a buy or sell signal.

Base case of the 5-year discounted cash flow model on the stock's Valuation tab (statements TTM to H1 2026; discount rate 4.9%). Bear and Bull move the main assumptions by fixed steps. See and change the assumptions

Filings and data used

Report history

  1. Oct 21, 2026Update noteModel fair value changeHwaseung: Model Estimate Rises Sharply to ₩21,846 Per Share After Discount Rate Change
  2. Oct 18, 2026InitiationStart of coverage (reader request)Hwaseung: Low Multiples and High ROE, but a Model Estimate Well Below the Share Price

Built only from jonbur's own data: prices and investor flows, filed financial statements and filings, and news headlines. Disclosed (filed) data is labelled as such. Written by AI and may contain mistakes.

This is not financial advice. The report does not recommend buying or selling anything.

Source: KRX statistical information