[Click eStock] Hanwha Aerospace, Profit Expected to Decrease Due to Increased Investment... Target Price Down

[Asia Economy Reporter Hwang Yoon-joo] On the 28th, Daishin Securities maintained a 'Buy' rating on Hanwha Aerospace but lowered the target price to 59,000 KRW, citing expected operating profit decline due to increased investments.

Lee Dong-heon, a researcher at Daishin Securities, stated, "In 2022, although the scale will continue to grow due to the reopening of aircraft engines, an increase in defense order backlog, system expansion, and growth in civilian business, operating profit is expected to decline due to increased investments."

The researcher added, "During the Q4 earnings conference call last year, the company anticipated the reduction in the international joint development project (RSP) of the aircraft engine business to occur around 2028-2029, but the company mentioned that due to the impact of COVID-19, there is a possibility of a 2-3 year delay compared to the schedule."

Hanwha Aerospace is exploring ways to offset the RSP reduction by expanding volume or parts. Due to increased transportation rates and bottlenecks, Techwin's overall costs increased by about 7 to 8 billion KRW. Semiconductor materials costs increased by approximately 10 billion KRW due to supply chain issues, requiring purchases from external suppliers rather than existing partners.

The researcher cited the company's responses during the conference call, indicating that the overseas market and overseas order project situation in 2022 are not positive.

He explained, "In the European market, competition with Chinese products makes the situation challenging," and added, "Sales are expected to increase slightly compared to last year, but the sales growth is not significantly visible."

He further noted, "Techwin's sales growth is expected with a U.S. B2B target market, and the Australian LAND 400 project is awaiting the preferred negotiation partner status in June."

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