Both Hanwha Aerospace and Hyundai Rotem were estimated to have reached their annual targets early for volumes exported to Poland. Securities firms are offering optimistic stock outlooks, projecting additional orders based on the two companies' delivery capabilities.
Hanwha Aerospace shares traded at 1,013,000 won at 2:12 p.m. on the 22nd. The stock rose 4% (39,000 won) from the previous day, reclaiming its "emperor stock" status (100,000 won or more per share) for the first time in six trading days since the 14th. At the same time, Hyundai Rotem rose 8.16% (17,250 won) to 228,750 won. It was the first time in seven trading days since the 13th that Hyundai Rotem topped the 220,000-won level intraday.
The rise in defense stocks that day appeared to be influenced by renewed instability in the international situation. A cease-fire between Israel and Hamas, the armed group in the Gaza Strip, faced a crisis after just over 10 days, and a summit between U.S. President Donald Trump and Russian President Vladimir Putin, which had been pushed to discuss an end to the war in Ukraine, effectively fell through.
After the news broke, global defense industry stocks rebounded. Previously, as Middle East tensions eased and expectations grew for an end to the Russia-Ukraine war, both Hanwha Aerospace and Hyundai Rotem had shown sluggish stock performance this month.
With the international landscape wobbling again, the competitiveness of Korea's defense sector is back in the spotlight. In particular, the domestic defense industry is proving its strength in fast delivery. Based on an analysis of export data, global investment bank (IB) JP Morgan said Hanwha Aerospace shipped 30 Cheonmu launchers and 21 K9 howitzers to Poland in September. Year-to-date shipments are 90 Cheonmu and 80 K9.
Considering it usually takes two months from shipment to delivery, the units produced in September are expected to arrive in Poland around November. This suggests a high likelihood that Hanwha Aerospace will exceed its annual delivery targets of at least 80 Cheonmu and at least 70 K9.
JP Morgan also assessed that Hyundai Rotem shipped 20 K2 tanks bound for Poland in September. Even accounting for the two-month delivery lag, it met its annual target within the year.
In particular, Hyundai Rotem's cumulative deliveries of K2 tanks since 2022 reached 180 units including this shipment, fulfilling the entire volume under the first contract with Poland. JP Morgan said Hyundai Rotem could further revise up its earnings outlook under the second executive contract signed with Poland.
Hyundai Rotem signed a second executive contract worth a total of $6.5 billion with the Polish Armaments Agency in Aug. The contract covers a total of 261 units, including 116 K2 tanks (K2GF), 64 Polish-type K2 tanks (K2PL), and 81 variant tanks used for tasks such as recovery and engineering.
Securities firms projected that shares of Hanwha Aerospace and Hyundai Rotem have a strong chance of rising. According to the U.S. investment platform MarketScreener, the average target price for Hanwha Aerospace among 21 domestic and overseas institutions is 1,282,750 won. The average target price for Hyundai Rotem among 16 institutions is 273,440 won. Each is 31.7% and 29.3% above the current price, respectively, as of that day.
However, based on 2026 earnings forecasts, the price-earnings ratios (PER, market capitalization ÷ net income) of Hanwha Aerospace and Hyundai Rotem are 23 times and 22.4 times, respectively, higher than those of global defense corporations such as Lockheed Martin (16.9 times), which is a burden.
New order performance is expected to determine the share price direction. Baek Jong-min, an analyst at Yuanta Securities Korea, said, "For Hanwha Aerospace, whether it wins orders such as the joint venture (JV) with the Saudi Arabian Ministry of National Guard, the Romania infantry fighting vehicle project, and the U.S. self-propelled howitzer modernization project will be important." Choi Gwang-sik, an analyst at DAOL Investment & Securities, said, "The focus is on whether Hyundai Rotem can export K2 tanks to Iraq and Romania, and how much the joint venture in Poland will help spread the main battle tank (MBT) across Europe."