Korea Investment & Securities assessed on the 18th that Hanwha System has secured two growth drivers: defense and shipbuilding. It maintained its investment opinion as 'Buy' and raised the target stock price by 58.1% to 68,000 won. The previous closing price of Hanwha System was 55,400 won.
Korea Investment & Securities forecasted that Hanwha System will achieve a consolidated revenue of 890.7 billion won and an operating profit of 69.2 billion won in the second quarter. Although the revenue represents a 29.6% increase compared to the same period last year, the operating profit is a figure that has decreased by 13.3%. Additionally, the operating profit is 8.2% lower than the consensus estimate.
Jang Nam-hyun, a researcher at Korea Investment & Securities, said, "Foreign sales account for 21.7% of defense revenue, and a good profitability is being maintained," adding, "It is also understood that, contrary to previous expectations, the own investment expense has not been executed." He then estimated the defense operating profit margin at 10.9% based on this.
Korea Investment & Securities expected that the pace of performance improvement in Hanwha System's defense sector will accelerate.
Researcher Jang noted, "As key defense export projects, including the Middle East Cheongung-II multifunctional radar, proceed smoothly this year, profits are expected to increase," adding, "The expected operating profit this year is projected to increase by 12.5% compared to the same period last year to 246.7 billion won."
Additionally, regarding Hyundai Rotem's recent signing of a second export contract for K2 tanks with Poland worth $6.5 billion, it was estimated that Hanwha System accounts for over 7% of the K2 tank components.
Reflecting the increase in exports of K2 tank components to Poland, Korea Investment & Securities estimated Hanwha System's operating profit for 2026 to be adjusted upwards by 10.1% from the previous estimate to 350.3 billion won. This figure represents a 42% increase compared to the previous year.
Researcher Jang analyzed, "In addition to the value generated by Hanwha System's core business, the target price was raised to reflect the value created by entering the U.S. merchant and military ship markets," noting that "55% of the appropriate corporate value of 12.8 trillion won is generated from the core business, while 45% comes from the value created by entering the U.S. shipbuilding market."