Korea Investment & Securities noted on the 30th that sales from the complete aircraft export business for Korea Aerospace Industries are expected to increase starting next year, leading to significant profit improvements. It raised its target price from the previous 97,000 won to 120,000 won and maintained its investment opinion of 'buy.' The closing price for Korea Aerospace Industries on the previous trading day was 100,500 won.

Guests and visitors examine the six-degree-of-freedom delivery unmanned vehicle at the Korea Aerospace Research Institute (KARI) booth at the 2024 UWC, which opens in July last year at COEX in Gangnam, Seoul. /Courtesy of News1

Korea Aerospace Industries reported that its consolidated sales in the second quarter of this year decreased by 7.1% year-on-year to 828.3 billion won, while its operating profit increased by 14.7% to 85.2 billion won. Although the sales fell short of market expectations by 5.7%, the operating profit exceeded expectations by 25.8%. This reflects non-recurring gains of over 20 billion won included in the operating profit.

In the second half of the year, an increase in the number of domestic business deliveries is expected to show a trend of profit improvements. Additionally, sales from the complete aircraft export business will be increasing starting next year. Jang Nam-hyun, a research analyst at Korea Investment & Securities, explained, "The progress recognition speed for the export projects of FA-50 to Poland and Malaysia is accelerating, and recognition of revenue from the FA-50 export project to the Philippines, ordered last June, will begin."

Additionally, the sales in the structural components institutional sector are projected to increase by 14.5% year-on-year. Research analyst Jang estimated the operating profit for next year to surge by 42.9% to 513.5 billion won, stating, "Both projects are currently recording gross profit margins (GPM) exceeding 20%."

Jang noted, "In addition to the profit improvements beginning in the second half of the year, the export momentum is also strengthening," adding, "In particular, the selection of a contractor for the naval trainer project is expected in the first half of 2027, and therefore a request for proposal (RFP) will be sent out this year in the fifth quarter."

He also said, "Collaboration with Lockheed Martin for the orders is becoming visible and could serve as a driving force for stock price increases."

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