[Into the Stock] Nuriho Delayed Again... Hanwha Aerospace Unable to Fly

Core Component Manufacturing Engine Assembly Responsible
Indefinite Launch Postponement Poses Short-Term Stock Pressure
Need to Expand Mid- to Long-Term Interest in Defense Sector

[Asia Economy Reporter Minji Lee] "Ah... By now, I thought my stocks would have soared into space...",

"Other defense stocks are all flying high right now, but because of Nuriho, they can't move forward."

Before the market opened on the 16th, the Hanwha Aerospace stock discussion board was flooded with complaints from shareholders. According to schedule, the Korean launch vehicle Nuriho (KSLV-II) was supposed to be launched that day, but the launch was indefinitely postponed due to weather and then a vehicle defect issue. On that day, Hanwha Aerospace's stock price fell as much as 3.9% from the previous trading day to 51,400 KRW in early trading.

Regarding the launch delay, the Korea Aerospace Research Institute (KARI) explained, "There was an abnormality in the level sensor of the first stage oxidizer tank," adding, "If the sensor needs to be physically replaced, disassembly sufficient to replace this part is required." There is about a week left until the launch backup date (the period by which the launch must be completed) on the 23rd. However, if this period is exceeded, the launch could be delayed for a long time due to the monsoon and typhoon influence. Investors who invested in stocks based on Nuriho launch materials are bound to feel the pain.

Source=KB Securities

Hanwha Aerospace was responsible for manufacturing key components such as turbines, oxidizer and fuel pump thruster systems, and drive systems in the Nuriho project, as well as the final engine assembly. Together with Korea Aerospace Industries, which handled the overall assembly, Hanwha Aerospace plays the most crucial role in the Nuriho launch.

However, securities firms unanimously agreed that the failure to launch Nuriho into space immediately does not warrant lowering expectations for growth in the aerospace sector. KARI has already completed preparations for the third Nuriho launch early next year and plans four additional launches by 2027.

Jung Eui-hoon, a researcher at Eugene Investment & Securities, said, "Although Hanwha Aerospace cannot be completely excluded from the cause of this delay, the delay does not cause significant problems for the company, so the stock price is unlikely to plunge sharply," adding, "On the other hand, expectations for Nuriho have already been fully reflected in the stock price, so even if the launch succeeds later, a sharp rise is unlikely."

Rather, there is reason to expect growth in the defense sector. Since Russia's invasion of Ukraine, news that countries worldwide are actively strengthening their defense capabilities has greatly expanded investment sentiment toward domestic defense stocks. In fact, Korea Aerospace has surged 65% this year, and Speco (16.55%) and LIG Nex1 (11.3%) have also shown double-digit gains. Hanwha Aerospace (5%) has a smaller defense sector proportion compared to Korea Aerospace or LIG, so it has received relatively less attention, but considering the order momentum in the second half, its earnings stability is highly regarded.

Last year, Hanwha Aerospace filled its order backlog with more than 3 trillion KRW. In February this year, it signed a contract to supply K9 self-propelled howitzers worth 2 trillion KRW to Egypt, and in the second half, it is preparing to be the preferred negotiator for Australia's 5 trillion KRW Redback armored vehicle project. Na Seung-doo, a researcher at SK Securities, emphasized, "It is difficult to say that the Nuriho launch determines the company's performance and stock price fate," adding, "Attention should be paid to the increasing export ratio centered on Hanwha Defense, such as the potential export of the K-30 Biho combined system."

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