[Click eStock] "Defense Stocks, Price Gains to Widen... Increase Investment Proportion"

Hana Bank has issued an investment opinion of 'Overweight' on the sharply rising domestic defense stocks since the second half of last year, stating that "looking at the PER (forward price-to-earnings ratio), the stock price increase could become even steeper in the long term."

On this day, Hana Securities researcher Wi Kyung-jae said, "The speed of recovery to an appropriate level is not expected to be very fast, but the potential for stock price growth based on significant profit growth remains valid, and in the long term, the stock price increase could become steeper during the process of returning to an appropriate multiple."

He pointed out, "The reason why the PER of domestic defense in the past was high was due to high prices and low earnings." He added, "Domestic defense companies have received somewhat high valuations relative to their earnings strength, which is due to the unique division of the Korean Peninsula," and explained, "there is also an impact from low earnings. Behind the uniqueness of the division lies the limitation of profitability. They have focused on the domestic market, and exports have been insufficient."

Researcher Wi stated, "the recent discount factor is, paradoxically, believed to be in the gradual acquisition of export competitiveness," emphasizing, "During the process of increasing export proportions, the margin rates of domestic defense have gradually improved, and expectations for future profits have also been raised." He also added, "Although stock prices have risen sharply, it is judged that the PER of domestic defense has somewhat declined as it has not fully reflected the expectations for profit growth."

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