LS SECURITIES noted that the performance of Korea Aerospace Industries (KAI) in the first quarter of this year did not meet market expectations (consensus), but explosive growth is anticipated after the second half. The target stock price was raised from the previous 95,000 won to 105,000 won, and the investment opinion was maintained as "buy."
Korea Aerospace Industries' consolidated revenue for the first quarter of this year was 699.3 billion won, and operating profit was 46.8 billion won. Domestic business revenue was 322.1 billion won, falling significantly short of the consensus of 592 billion won. This was due to lower-than-expected deliveries of the Light Armed Helicopter (LAH) MIROH and revenues from the development of the domestic fighter jet KF-21. In the finished aircraft sector, the revenue from the FA-50 development exceeded estimates, recording 171.1 billion won.
Choi Jeong-hwan, a researcher at LS SECURITIES, said that "expenses incurred for future investments included development costs of 29.3 billion won and interest from a borrowing fund of 200 billion won. Therefore, it appears that due to the resulting interest costs, both operating profit and pre-tax profit fell short of expectations."
However, after the second half of this year, sales from the FA-50 development are expected to gain momentum, and there are new export contract opportunities in regions such as the Philippines, Asia, and the Middle East. If new businesses are won, revenue is expected to reach 617.9 billion won and operating profit 56.2 billion won next year, which represents increases of 55.6% and 82%, respectively, compared to this year's expected revenue and operating profit.