[Click e-Stock] "Hyundai Rotem: Order Pipeline Expectations…Target Price Raised"

On April 28, BNK Securities raised its target price for Hyundai Rotem from 2.7 million won to 2.9 million won, while maintaining its "Buy" investment rating.

Lee Sanghyun, a researcher at BNK Securities, stated that although Hyundai Rotem has underperformed the KOSPI market this year due to some delays in the order pipeline that was expected after the K2 export deal to Poland, the company anticipates increased visibility in its order pipeline. This expectation is based on the global expansion of conflicts and the new Cold War, which are driving demands for military expansion, as well as the strong competitiveness of domestic defense products in terms of price, performance, quality, and delivery.

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Hyundai Rotem achieved its highest-ever first-quarter results this year. For the first quarter of 2026 on a consolidated basis, sales reached 1.4575 trillion won, up 23.9% year-on-year, and operating profit was 224.2 billion won, up 10.5% from the same period last year. The operating profit also met the market consensus of 221.7 billion won.

Additionally, the weak won generated about 80 billion won in foreign exchange effects, resulting in 51.4 billion won in non-operating profit. The company’s credit rating was also raised by the three major credit rating agencies from A+ (positive) to AA- (stable).

In his earnings announcement, Lee focused on the progress of localizing the K2 business in Poland and the increasing visibility of new pipelines such as aerospace. He explained, "The risk costs that were set during the initial contract with Poland, taking into account local uncertainties, did not materialize thanks to rapid quality stabilization, which contributed to profit improvement. For the second contract, these risks have been reduced, so a more stabilized profit margin is expected."

He added, "In the aerospace sector, which is a new growth engine, the advancement of 10-ton-class methane engines and the new development of reusable 3-ton-class methane engines are being pursued as a two-track strategy. In the field of supersonic and hypersonic guided weapon engines, revenue has already been generated, and infrastructure investments have begun for the production of air-to-air missile guided engines, demonstrating the company’s active efforts to diversify its future defense portfolio."

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