[Click eStock] "Korea Aerospace Industries, Aviation Manufacturing Industry Recovery Expected... Target Price Up 9%"

Daishin Securities Report

[Asia Economy Reporter Minji Lee] Daishin Securities maintained a buy rating on Korea Aerospace Industries on the 6th, expecting a recovery in the aerospace manufacturing industry, and raised the target price by 9% from the previous level to 36,000 KRW.

In the fourth quarter of last year, the company's performance is expected to show sales of 932.8 billion KRW and operating profit of 46.3 billion KRW, representing a 22% increase and a turnaround to profitability compared to the same period last year. Sales and operating profit are estimated to exceed market expectations by 5% and 18%, respectively.

In the domestic sector, performance is expected to increase temporarily in the fourth quarter due to the deferred delivery volume of Surion helicopters caused by the Medion emergency landing in the third quarter. As deliveries are concentrated, some volumes are expected to be further deferred. Exports of complete aircraft are predicted to be sluggish due to a decrease in existing backlog. The follow-up project in Iraq (426.6 billion KRW), Indonesia T-50 (6 units, 274.4 billion KRW), and Thailand T-50 (2 units, 89.6 billion KRW), which were ordered in the second half of last year, are expected to be reflected in this year's performance. The airframe parts sector has entered a recovery phase but is expected to show a slow recovery due to the impact of Omicron. Researcher Dongheon Lee of Daishin Securities said, “It is estimated that there are no separate one-time gains, but a temporary improvement in profitability due to increased sales.”

Last year's new order announcements amounted to 2.7 trillion KRW, close to the target of 2.87 trillion KRW. Airframe parts orders were 900 billion KRW, overseas exports 800 billion KRW, and the domestic sector 1 trillion KRW, which is considered a solid performance given the external conditions. Researcher Dongheon Lee said, “Although the recovery in airframe parts is positive, net profit is expected to decline this year considering one-time gains,” adding, “Full-scale growth is expected to appear from 2023, with the U.S. advanced trainer aircraft project and airframe parts recovery as variables.”

This content was produced with the assistance of AI translation services.