Hanwha Group shares have soared following the company’s announcement of a spin-off plan, setting the stage for major strategic shifts within the conglomerate and diverse fortunes for its various business divisions. The move, unveiled on January 14 and rapidly embraced by the market, marks an ambitious restructuring targeting both technology and lifestyle segments, while leaving its financial affiliates largely untouched—at least for now.
According to trading data from the Korea Exchange, Hanwha Group’s twelve listed affiliates (excluding preferred shares) posted a 10.9% average rise in share price over just four trading days starting January 13, ahead of the official announcement. This performance eclipsed other major South Korean conglomerates like Samsung, SK, Hyundai, LG, and Lotte during the same period. Since the beginning of the year, Hanwha’s listed firms have enjoyed a 26.6% average gain, partly fueled by warming investor sentiment toward defense and shipbuilding stocks and the buoyant response to the spin-off plan.
The restructuring focuses on dividing Hanwha’s existing tech and lifestyle businesses—such as Hanwha Vision and Hanwha Galleria—and transferring them to a newly created entity: Hanwha Machinery & Service Holdings. This new holding arm aims high, targeting 30% average annual sales growth, far exceeding the 10% projected by Hanwha Corp. In a bid to sweeten shareholder support, Hanwha committed to canceling 4.45 million treasury shares, increasing dividend payouts, and boosting annual return on equity to 12%—measures that sent Hanwha Corp.’s stock surging 21.9% in the days following the announcement.
The sharpest stock gains were concentrated in the lifestyle and tech units managed by the third son, Vice President Kim Dong-sun. Hanwha Galleria’s value rocketed by 77.1%, while Hanwha Vision added 9.0% over four days. Investors appeared particularly optimistic about these subsidiaries, reflecting the market’s expectation for aggressive investments and rapid expansion under the new holding company’s high-growth targets.
By contrast, the defense and shipbuilding units led by Vice Chairman Kim Dong-kwan saw only modest movement, with a 1.2% average increase after the spin-off announcement—likely just profit-taking after strong early-year rallies. Still, defense companies under the Hanwha banner have posted impressive annual gains of 34.5%. The financial division, under President Kim Dong-won, fared moderately with a 4.1% jump across its four listed affiliates, yet this lags behind the tech and retail surge and reflects ongoing sector challenges.
Industry analysts note that while investors expect Kim Dong-sun to consolidate power in the new holding firm, interest in the financial division has cooled. The reason: a spin-off involving Hanwha Life Insurance, Hanwha General Insurance, and other financial units faces greater governance hurdles and is unlikely to occur soon. Financial conditions—such as pressure in insurance and real estate—and the ongoing IPO preparations for Hanwha Energy also contribute to the delay.
Hanwha Group’s leadership faces an intricate challenge managing succession, business portfolio growth, and market expectations. One key question is when the financial division, which produced the second-highest revenue at Hanwha after last year’s Hanwha Corp., will be eligible for a similar split. Experts suggest this move is inevitable but likely will only happen after Hanwha Energy completes its IPO and a subsequent merger with Hanwha Corp. The restructuring would then allow President Kim to strengthen his stake and influence within the expanded Hanwha framework.
The spin-off announcement has set off a wave of speculation about future moves for each business segment. Investors are closely watching whether Hanwha Corp.’s valuation or Hanwha Energy’s IPO will ultimately shape the power dynamic among the founding family and impact the pace of additional splits. For now, Hanwha’s bold bet on growth is stirring excitement—and a healthy dose of competition—among the three brothers at the helm of Korea’s industrial powerhouse.
