[Click eStock] "Hanwha Aerospace, Continued Solid Performance... Investment Opinion & Target Price Up"

Target Price Raised by 30.8% from Previous
Investment Opinion Upgraded from 'Neutral' to 'Buy'

On the 15th, KB Securities raised the target price for Hanwha Aerospace from 325,000 KRW to 425,000 KRW, expecting strong performance to continue in the third quarter following the second quarter of this year. The investment rating was also upgraded from 'Hold' to 'Buy.'

Jung Dong-ik, a researcher at KB Securities, explained, "Reflecting changes in earnings estimates due to the spin-off, the target price has been raised by 30.8% compared to the previous level," adding, "With the target price increase, the upside potential has expanded to 19.2%, leading to an upgrade in the investment rating."

With the completion of the spin-off procedure separating the defense and non-defense sectors, the market capitalization increased contrary to concerns. Researcher Jung analyzed, "There was a temporary adjustment around the suspension of stock trading, but it quickly recovered. On the last trading day before the spin-off, Hanwha Aerospace's market cap was 14.7 trillion KRW, but on the day trading resumed, Aerospace had 14.4 trillion KRW and Industrial 1.8 trillion KRW, totaling 16.2 trillion KRW, already exceeding the pre-spin-off market cap. Due to continued stock price increases, since June 4, Hanwha Aerospace's market cap alone has surpassed the pre-spin-off level."

Hanwha Aerospace recently announced a large-scale new facility investment plan. This decision is analyzed as a reflection of confidence in the future. Researcher Jung said, "They plan to invest 667.3 billion KRW by the end of 2026 to establish a smart factory for propulsion systems to respond to domestic and international demand. Considering that the average annual capital expenditure over the past three years was 84.7 billion KRW (on a separate basis), this is an unusually large-scale investment," adding, "This decision is judged to reflect confidence in the sharply increased demand for 155mm shells following the Russia-Ukraine war."

The third-quarter performance is expected to exceed market forecasts. Researcher Jung estimated, "The third-quarter results are expected to record sales of 2.4427 trillion KRW and operating profit of 323.9 billion KRW. Although Hanwha Vision and Hanwha Precision Machinery were excluded from consolidation due to the spin-off, making comparisons with consensus (average securities firm forecasts) less meaningful, considering that the operating profit consensus, which mostly does not reflect the spin-off, is around 332.6 billion KRW, the operating profit of the continuing business is expected to significantly exceed market expectations," and analyzed, "With increased deliveries of the Chunmoo multiple launch rocket system and K9 self-propelled howitzers to Poland, strong performance is continuing following the second quarter."

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