SK Securities said on the 7th that exports of defense weapon systems such as the K9 self-propelled howitzer by Hanwha Aerospace are highly likely to expand across Europe and the Middle East in the second half of this year. It initiated coverage with an investment opinion of "Buy" and a target price of 1.9 million won. The previous trading day's closing price of Hanwha Aerospace was 1.45 million won.
SK Securities judged that Hanwha Aerospace's defense exports will expand toward the second half of this year.
This month, Hanwha Aerospace signed a follow-up contract worth 2.4 trillion won with its local subsidiary to carry out the third execution contract for the Chunmoo guided rocket with Poland. In Feb., it signed a Chunmoo export contract worth 1.3 trillion won with Norway.
Within the year, there is potential to sign multiple orders, including Spain's K9, Saudi Arabia's Multi-mission National Guard (MNG), Romania's Redback armored vehicle, and Poland's K9 third execution contract (EC3).
On this, Han Seung-han, a researcher at SK Securities, said, "This year, Hanwha Aerospace is expected to maintain a profitability trend similar to last year without a decline in the export share, thanks to increased production volumes of K9 for India and Egypt, parts for Poland, and the start of K9 supplies to Australia."
In particular, the researcher said Hanwha Aerospace's export pipeline is expanding across Europe.
The researcher explained, "Among France's candidates for multiple rocket launchers, local assessments indicate that Chunmoo is a strong possibility over the U.S.-made High Mobility Artillery Rocket System (HIMARS) and the Israel-Germany joint product Precise and Universal Launching System (PULS), raising the likelihood of orders," and added, "Along with Poland's K9 EC3, Finland and Estonia have steadily worked since last year on budgeting for additional K9 acquisitions, increasing the likelihood of orders within the year."
Exports to the Middle East are also likely to expand. The researcher said, "Saudi Arabia's Ministry of National Guard (MNG) project could see its decision timing delayed from the first half to the second half due to the Iran war, but it is only a matter of timing; in fact, the war has narrowed the prospects of rival China, increasing Hanwha Aerospace's chances of winning orders."
The researcher added, "In particular, following the early delivery of Cheongung-II to the Middle East and requests for additional quantities, even an export contract for the long-range surface-to-air missile (L-SAM) is anticipated, and the order momentum is expected to expand as the year heads into the second half."