[Click eStock] "Hanwha Aerospace Maintains Target Price at 460,000 Won"

Meritz Securities maintained a target price of 460,000 KRW and a buy rating for Hanwha Aerospace on the 1st.

In the third quarter, sales reached 2.63 trillion KRW and operating profit was 477.2 billion KRW, recording strong results that exceeded consensus by 39.9%. In particular, the ground defense sector drove the surprise with an operating profit margin of 26.6%. This was due to increased deliveries of K9 and Cheonmu to Poland compared to the previous quarter, as well as improved profitability in export business (OPM 33~34%). It is expected to exceed the Poland delivery guidance set at the beginning of the year.

For the fourth quarter, deliveries are expected to be 42 units of K9 and 17 units of Cheonmu. The domestic business is also expected to continue its highly profitable mass production business into the next quarter. With both export and domestic businesses in positive conditions, the trend of earnings growth is expected to continue in the fourth quarter, setting a new quarterly record.

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Recently, attention is needed on the company’s ammunition business. While large-scale sales occur at the time of delivery for armored vehicle orders, steady demand for consumables cannot be ignored. On September 5, the company signed an MOU with Polish defense company WB for local production of 80 km guided missiles for Cheonmu (locally named HOMAR-K), followed by a public announcement on September 25 of new facility investment worth 667.3 billion KRW for propulsion charge production equipment.

Since Cheonmu has received a positive response locally in Poland, demand for guided missiles is expected to remain steady. Propulsion charges are currently items experiencing supply shortages in Europe, making the company’s presence in this area highly prominent. The ammunition business, with clear mid- to long-term demand, will support the downside of the company’s performance, reduce volatility, and help secure a more stable business foundation.

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