SK Securities on the 7th said Korea Aerospace Industries (KAI) is expected to post earnings showing a typical lower-first-half, higher-second-half pattern this year as KF-21 mass production gets fully underway. It set a target price of 230,000 won and a Buy rating. The previous trading day's closing price for Korea Aerospace Industries (KAI) was 183,100 won.
For the first quarter of this year on a consolidation basis, revenue and operating profit are forecast at 1.0724 trillion won and 85.3 billion won, up 53.4% and 82.2%, respectively, from a year earlier. Operating profit is expected to come in slightly below the market consensus of 88.3 billion won.
Han Seunghan, an analyst at SK Securities, said, "There should be no difficulty meeting the sales target driven by growth in domestic business results this year, but KF-21 mass production is concentrated in the fourth quarter," adding, "Quarterly results will show a typical lower-first-half, higher-second-half profile."
Han said, "Through KF-21 mass production and export volumes, results could show the growth trend seen in past upcycles from this year through 2030," adding, "Until then, export expectations to many countries globally, including Poland, Iraq and Malaysia, are also expected to gradually expand."
In particular, regarding the U.S. Navy's Undergraduate Jet Training System (UJTS) replacement program, worth about 10 trillion won, for which a recent request for proposals (RFP) was issued, the final contractor is expected to be selected at the end of this year, followed by a final contract in the first quarter of next year.
Han said, "We expect a share-price momentum (growth driver) on rising order expectations for Korea Aerospace Industries (KAI), which is working with Lockheed Martin in the United States."