Heungkuk Metaltech Securities said on the 24th that Korea Aerospace Industries (KAI) is expected to see its competitiveness stand out on the back of sales growth through large domestic mass-production programs and rising overseas exports. The firm maintained its "Buy (BUY)" investment opinion and raised its target price to 210,000 won. The previous trading day's closing price of Korea Aerospace Industries (KAI) was 175,600 won.
Last year, Korea Aerospace Industries (KAI) posted sales of 3.699 trillion won, up 1.7% from a year earlier, and operating profit of 269.2 billion won, up 11.8%. New orders rose 30.4% to 6.395 trillion won, including the first mass production of the KF-21 and additional FA-50 orders from the Philippines.
Researcher Choi Jong-gyeong at Heungkuk Metaltech Securities explained, "The sales figure reflects delays in the delivery schedule for domestically completed aircraft and an adjustment in the revenue recognition timing for items such as the Poland FA-50 based on percentage-of-completion, while orders reflect delays in completed-aircraft exports and the airframe structures segment."
Choi said, "Despite a similar sales trend, operating profit recovered to double-digit top-line growth and a profit margin in the 7% range, and orders also demonstrated a clear turnaround in sentiment with the start of KF-21 mass production and the expansion of export programs, despite some delays versus targets."
Korea Aerospace Industries (KAI)'s results are expected to improve this year. Heungkuk Metaltech Securities projected this year's sales and operating profit for Korea Aerospace Industries (KAI) at 5.53 trillion won and 494.6 billion won. Sales would be up 49.6% from the prior year. New orders are forecast at 9.916 trillion won.
Choi said, "According to the annual order and sales outlook (guidance) that Korea Aerospace Industries (KAI) released in February, the company is targeting sales of 5.731 trillion won and orders of 10.438 trillion won, indicating strong growth."
He added, "With sales growth driven by large domestic mass-production programs such as the KF-21 and LAH, and with higher progress rates in Poland and Malaysia leading to a secured growth base centered on completed-aircraft exports, its competitiveness is expected to stand out further as a 'defense export company based on large-scale mass production.'"