[Click eStock] Hanwha Aerospace, Expected Order Expansion Amid Defense Industry Boom

[Asia Economy Reporter Lee Seon-ae] IBK Investment & Securities announced on the 2nd that it maintains a buy rating and a target price of 69,000 KRW for Hanwha Aerospace.

Lee Sang-hyun, a researcher at IBK Investment & Securities, explained, "Although there are some concerns about cost increases, stable earnings growth is expected due to expansion in scale, and positive factors such as strong performance in the defense sector and expectations for large-scale orders (approximately 5 trillion KRW for the Australian Redback) are also expected to positively impact the stock price."

In 2021, the annual sales reached 6.4151 trillion KRW (+21% yoy), operating profit was 383 billion KRW (+57% yoy), and operating profit margin was 6.0% (+1.4%p yoy). Significant growth was recorded due to continuous growth in the civilian business and stable performance in the defense business, achieving the highest performance since its launch under Hanwha Group in 2015.

Sales in 2022 are expected to continue growing across most business sectors. This is due to an increase in defense sector orders and a steady recovery in demand in the civilian sector. From an operating profit perspective, cost pressures such as rising material and logistics costs remain, and losses reflecting the full-scale investment in new system businesses may limit the extent of improvement.

However, since the 2021 performance exceeded the planned targets, it is expected that profitability leverage effects from scale expansion and stabilization of cost burdens in the second half of 2022 will enable performance improvements as the year progresses.

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