by Son Seonhee
Published 26 Apr.2023 07:49(KST)
Shinhan Investment Corp. announced on the 26th that it is raising the target price for Hanwha Systems from 16,000 KRW to 18,000 KRW.
Hanwha Systems recorded sales of 439.5 billion KRW and an operating profit of 8.4 billion KRW in the first quarter of this year. Sales increased by 2% compared to the same period last year, but operating profit fell by 45%, significantly missing market expectations. There was a temporary decline in defense sector sales due to the completion of major projects such as the Cheolmae-II, a core power of the Korean missile defense system. However, IT demand increased due to the integration of affiliates, and valuation gains of 144.9 billion KRW from Daewoo Shipbuilding & Marine Engineering and 54.2 billion KRW from the conversion of Hanwha Phazer to an affiliate were reflected.
Hanwha Systems secured a 1.3 trillion KRW order for multifunction radars in the UAE Cheongung project and is expected to have overseas orders this year as well. The AESA radar for the KF-21 has begun flight testing, and there is potential for it to be installed on the FA-50 or civilian aircraft in the mid to long term. Additionally, in the space sector, as OneWeb’s satellite communication coverage expands globally by the end of the year, various business expansions are expected, including antennas from affiliates Hanwha Phazer and Kaimeta. Domestic orders for ultra-small SAR satellites are expected to begin around the second quarter of this year.
Myeong Ji-woon, a researcher at Shinhan Investment Corp., said, "Once the acquisition of Daewoo Shipbuilding & Marine Engineering (Hanwha Ocean) is completed in the first half of the year, synergies will begin in earnest. Although the current structure is not immediately profitable, with ongoing investments in satellites, UAM, and digital platforms this year, the long-term growth outlook is becoming visible based on Hanwha’s solid foundation."
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