[Click eStock] "Hanwha Systems, 20% Undervalued Compared to Industry Average...Valuation Highlighted"

[Asia Economy Reporter Park Jihwan] Shinhan Financial Investment maintained its 'Buy' rating and target price of 11,000 KRW for Hanwha Systems on the 12th, stating that the company is undervalued by nearly 20% compared to the defense industry average.

Hwang Eoyeon, a researcher at Shinhan Financial Investment, said, "Hanwha Systems recorded sales of 282.3 billion KRW and an operating profit of 10.9 billion KRW in the first quarter," adding, "Despite competing with other defense companies for orders, it achieved a favorable profit margin."

He forecasted this year's performance to reach sales of 1.7 trillion KRW and an operating profit of 90.4 billion KRW, representing increases of 6.8% and 5.4% respectively compared to the previous year. However, defense order volume is expected to decrease by 47.1% year-on-year to 1.1 trillion KRW.

Researcher Hwang analyzed, "Based on this year's performance, the price-to-earnings ratio (PER) is 11.4 times, which is 19.8% undervalued compared to the defense industry average," and added, "The company operates businesses completely unaffected by COVID-19 and held a net cash position of 400 billion KRW as of the end of the first quarter."

He emphasized, "From the second half of the year, profit growth compared to the previous year is expected to resume, making it a time when the undervalued valuation will be highlighted."

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