Hanwha Aerospace’s K9 self-propelled howitzer. Hanwha Aerospace
Hanwha Aerospace (012450.KS) fell for a second consecutive session, dropping to the low 1.1 million won range. Still, analysts say nearly 60% upside remains from the current price, citing an order pipeline extending to Poland, the United States, Spain and Saudi Arabia.
According to the Korea Exchange, Hanwha Aerospace (012450.KS) closed at 1,122,000 won on the 19th, down 67,000 won (5.63%) from the previous session. The decline followed a 2.86% drop the day before, marking two straight sessions of weakness. Compared with the closing price of 1,224,000 won on the 17th, the stock has fallen 8.33% over the two days. During the session, it dropped as low as 1,095,000 won, breaking below the 1.1 million won level.
Although the stock has undergone a short-term correction, brokerage expectations are rising. Hyundai Motor Securities issued a “buy” investment opinion and a target price of 1.78 million won for Hanwha Aerospace on Friday, naming it its top pick within the defense sector. Based on the closing price that day, the upside to the target price is 58.6%.
The rationale is order momentum. Hyundai Motor Securities cited the third Poland K9 contract, the U.S. wheeled self-propelled howitzer modernization project, Spain’s self-propelled howitzer modernization project, and the Saudi National Guard project as major opportunities. For the U.S. project, it assessed the competition as involving five companies, including Hanwha Aerospace, Rheinmetall and General Dynamics.
The firm also expects earnings to improve toward the second half. Hyundai Motor Securities forecast Hanwha Aerospace’s revenue this year at 30.568 trillion won and operating profit at 4.574 trillion won. The operating profit represents a 48.1% increase from last year. It explained that deliveries of more than 30 K9 units and more than 40 Chunmu units to Poland would be fully reflected in second-half earnings.
“Revenue recognition for Poland’s K9 and Chunmu is concentrated in the second half, so we expect an earnings trend weighted toward the latter half of the year,” said Baek Joo-ho, an analyst at Hyundai Motor Securities.
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