The Big Four in Defense Take on New Weight as Market Cap Surpasses 100 Trillion Won for the First Time

More Than Tripled Since Early This Year
Driven by Rising Weapons Demand in Europe and the Middle East

As the combined market capitalization of the "Big Four" K-Defense companies surpassed 100 trillion won for the first time, expectations are rising that the upward momentum of K-Defense will continue.

Hyundai Rotem K2 tank.

According to financial information provider FnGuide on September 28, the combined market capitalization of the domestic defense industry’s Big Four-Hanwha Aerospace, Hyundai Rotem, Korea Aerospace Industries (KAI), and LIG Nex1-reached 100.9753 trillion won as of September 24. This is the first time the Big Four’s market capitalization has exceeded 100 trillion won. Compared to the beginning of January this year (33.2822 trillion won), it has more than tripled. Although the figure dropped back to the 90 trillion won range after the 24th, it still hovers close to 100 trillion won.

Hanwha Aerospace’s market capitalization is nearing 55 trillion won, ranking sixth overall. Hyundai Rotem, which remained in the 5 trillion won range at the beginning of the year, has more than tripled to now exceed 20 trillion won. Korea Aerospace Industries and LIG Nex1 have both surpassed 10 trillion won.

The main reason for the surge in K-Defense market capitalization is cited as global security uncertainty. Since the outbreak of the Russia-Ukraine war in 2022, security risks have increased worldwide, prompting major countries, including those in Europe, to ramp up weapons purchases. During this period, K-Defense companies succeeded in securing large-scale contracts by leveraging cost-effectiveness and rapid delivery capabilities.

Recently, Hanwha Aerospace signed a contract with the Norwegian Defense Materiel Agency to supply an additional 24 K9 self-propelled howitzers. Last month, the company also signed a $250 million (350 billion won) export contract with the Vietnamese government for 20 K9 self-propelled howitzers.

Last month, Hyundai Rotem signed a second-phase implementation contract with the Polish Armaments Agency for K2 tanks worth $6.5 billion (about 9 trillion won). This marks the largest single export contract in the history of the domestic defense industry.

In June, Korea Aerospace Industries signed an export contract with the Philippine Department of National Defense for an additional 12 FA-50 aircraft, while LIG Nex1 has signed multi-trillion won contracts over the past three years to export the Cheongung II missile system to three Middle Eastern countries: the United Arab Emirates, Saudi Arabia, and Iraq.

With large-scale orders continuing, K-Defense companies are posting record-breaking results. Hanwha Aerospace’s operating profit forecast for the third quarter of this year stands at 886 billion won, up 85.7% from the same period last year (477.2 billion won). The securities industry expects that during the same period, Hyundai Rotem (261 billion won), Korea Aerospace Industries (85 billion won), and LIG Nex1 (80.1 billion won) will see their operating profits rise by 90%, 11.4%, and 54.3%, respectively.

The industry anticipates that the upward momentum of K-Defense will continue. This is because additional weapons purchases are being considered in Europe, the Middle East, and other regions due to ongoing geopolitical risks. Furthermore, the North Atlantic Treaty Organization (NATO) agreed in June to increase each member country’s defense budget to 5% of gross domestic product (GDP) over the next 10 years. As a result, NATO member countries such as the United Kingdom, France, and Germany are increasingly likely to expand their weapons procurement. In particular, the Middle East, facing issues with aging military equipment, is expected to present new opportunities for K-Defense.

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