KB Securities said on the 19th that it would raise Hyundai Rotem's target price by 20%, from 250,000 won to 300,000 won. Accordingly, it maintained its "buy" investment rating, keeping the defense sector as its top pick.
Hyundai Rotem has been steadily strengthening overseas orders. On the 1st of last month, it signed a second implementation contract for the K2 tank program worth 8.9814 trillion won with the Polish Armaments Agency. The contract includes technology transfer for 180 K2 tanks and for variants such as 81 bridge, recovery, and obstacle-clearing tanks.
Recently, expectations have been growing for the signing of new contracts with Middle Eastern countries. It is known that several countries in the Middle East are showing strong interest in Hyundai Rotem's tanks.
Jeong Dong-ik, an analyst at KB Securities, said, "Considering the status of exchanges with the Middle East and the parts value chain, we judge that one or more export projects are highly likely to be announced within the year," and noted, "Given the possibility that the K2ME with enhanced latest options will be delivered, the overall project size is expected to rival the second implementation contract with Poland."
Accordingly, the earnings outlook was also revised upward. KB Securities projected Hyundai Rotem's third-quarter revenue at 1.4665 trillion won and operating profit at 260.7 billion won. Both revenue and operating profit are expected to exceed market expectations (consensus). For the full year, revenue is projected at 6.0121 trillion won and operating profit at 1.1311 trillion won, up 37.4% and 117.4%, respectively, from a year earlier.