[Click eStock] "Hanwha Systems, Q1 Surprise... Target Price Up"

Sangsangin Securities analyzed on the 29th that Hanwha Systems recorded a first-quarter earnings surprise. The investment rating was maintained as Buy, and the target price was raised to 24,000 KRW.

Hanwha Systems posted first-quarter sales of 544.4 billion KRW and operating profit of 39.3 billion KRW, representing increases of 23.9% and 219.5% year-on-year, respectively. Kim Kwangsik, a researcher at Sangsangin Securities, said, "In the defense sector, sales reached 381.7 billion KRW and operating profit 34.0 billion KRW, up 30.5% and 155.7% year-on-year, respectively," adding, "The reason for improved profitability is the 18% export ratio in the first quarter and the temporary decrease in self-investment costs following the satellite’s own launch in December."

He explained, "In the ICT sector, sales were 160.5 billion KRW and operating profit 12.0 billion KRW, up 9.2% and 58.3% year-on-year, respectively," and added, "The proportion of captive sales to affiliates increased, and the amortization expenses of power purchase agreements (PPA) recognized last year decreased, resulting in high profitability."

He expects Hanwha Systems to grow significantly in the space sector. He said, "The first mission of the Space Agency, which will open in May, is expected to be the transition of space business to private sector leadership," and explained, "Hanwha Systems, which has already succeeded in its own launch, is expected to be the biggest beneficiary of the agency’s opening." He added, "Hanwha Systems is also judged to be in a favorable position in the multi-ministry development of small satellite systems currently underway."

He stated, "Reflecting the high export ratio recorded in the defense sector in the first quarter, we are raising the annual profitability forecast," and said, "Depending on the timing of orders for the Saudi-bound Medium-Range Surface-to-Air Missile (M-SAM) Multi-Function Radar (MFR), the export ratio could increase further." He added, "The defense order backlog at the end of 2024 is expected to reach 8.2 trillion KRW, a 10.2% increase compared to the previous year."

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