South Korea’s Hanwha surged 29% in early trading on its first day of relisting after completing a spin-off. The buying momentum appears driven by expectations that the holding company discount will narrow as the business structure is reorganized around core affiliates in defense, shipbuilding, energy, and financial services.

According to the Korea Exchange on the 25th, Hanwha traded at ₩124,900 (approximately $90), up ₩24,300 (29%) from the previous trading day as of 9:12 a.m. The newly listed entity Hanwha Machinery & Services Holdings soared 26.00%, triggering a static volatility interruption (VI).

Hanwha was split into the surviving entity Hanwha and the newly formed Hanwha Machinery & Services Holdings through a spin-off on the 1st of this month. The surviving entity retained stakes in core affiliates across defense, shipbuilding, energy, and financial services, including Hanwha Aerospace, Hanwha Ocean, Hanwha Solutions, and Hanwha Life. Five companies—Hanwha Vision, Hanwha Galleria, Hanwha Hotels & Resorts, Hanwha Momentum, and Hanwha Robotics—along with approximately ₩100 billion (approximately $72.2 million) in cash were transferred to the new entity.

Securities analysts noted that the spin-off simplifies Hanwha’s complex business structure and reduces discount factors previously applied to unlisted subsidiaries. With approximately 80% of listed subsidiary value concentrated in Hanwha Aerospace, the surviving entity is effectively reorganized as a defense and shipbuilding-focused holding company.

Mirae Asset Securities maintained its Buy rating on Hanwha and raised its target price from ₩107,000 to ₩185,000 (approximately $130).

Ryu Je-hyun, an analyst at Mirae Asset Securities, explained: “The split changes not only earnings but the very structure of how the discount rate is calculated. As the proportion of unlisted subsidiary value effectively disappears and the defense share of listed assets rises to approximately 80%, the peer group shifts from a diversified business holding company to a defense holding company.”

He further interpreted: “The separation of valuation metrics for growth assets and mature assets is itself the most significant meaning of this split.”

Mirae Asset Securities expects Hanwha’s net asset value (NAV) discount rate to narrow from 54.75% just before trading suspension to 50.85% over the next 12 months. The surviving entity’s NAV was calculated at ₩18.12 trillion (approximately $13.1 billion).

Positive signals also emerged on the earnings front. The surviving entity’s second-quarter consolidated earnings totaled ₩2.41 trillion (approximately $1.7 billion), up 80% year-over-year, marking an all-time high. Hanwha Aerospace grew 58% and Hanwha Solutions grew 200% year-over-year, driving the earnings improvement.

For the second-half outlook, increased defense and shipbuilding volumes are expected to offset the reduction in consolidation scope. Analyst Ryu said: “Most of the shareholder return resources remain with the surviving entity, and with the minimum dividend of ₩1,000 per share and treasury share and preferred stock cancellations bound by disclosure, further enhancement of shareholder value is expected going forward.”

The core of this split lies in establishing accountable management by business segment and achieving appropriate valuation from the market. It is interpreted as an attempt to resolve the discount factors that the diversified business holding structure has faced by separating businesses by their nature. The separation of defense and shipbuilding-centered growth assets from retail and service-centered mature assets—enabling distinct valuation metrics to be applied to each—appears to have driven the market’s positive response.