Korea Investment & Securities Co. said on the 15th that while it expects Hanwha Aerospace's operating profit in the first quarter of this year to fall short of expectations, the company remains highly attractive thanks to new export contract signings.
It maintained an investment opinion of "Buy" and raised the target price to 2 million won from 1.8 million won. Hanwha Aerospace's closing price in the previous trading day was 1,523,000 won.
Jang Nam-hyeon, an analyst at Korea Investment & Securities Co., said, "As overseas deliveries in the ground defense institutional sector are concentrated in the second half, the share of low-margin development revenue appears to have increased," and added, "However, we maintain the outlook for annual operating profit improvement, given the expansion of delivery volumes of parts to Poland and K9s to Australia and Egypt."
For the first quarter of this year, Hanwha Aerospace's consolidation-basis revenue is estimated at 6.0177 trillion won and operating profit at 710.2 billion won. Compared with a year earlier, revenue is up 9.7% and operating profit is up 26.7%. Operating profit is expected to fall 16.7% short of the market consensus of 852.8 billion won. For the full year, operating profit is projected to come in at 4.2731 trillion won, up 38.3% from a year earlier.
An additional positive is the outlook that the market share of the multiple launch guided weapon "Cheonmu" will expand as replacement demand for multiple launch rocket systems in Europe increases. With M270-series systems in Europe facing inevitable retirement due to aging and discontinued parts, Eastern European countries also need to replace aging Soviet-era platforms and build new ecosystems.
Korea Investment & Securities Co. estimated that 1,183 multiple launch rocket systems in Europe require replacement. It analyzed that considering supplies such as ammunition and parts, there is an export market worth more than 2.98 trillion won.
Jang said, "Cheonmu is increasing its market share based on a comparative advantage of fast delivery and operational flexibility," adding, "Export contracts have already been signed with Norway and Poland, and order expansion is expected to occur in Europe, including France."
With an increase in overseas defense revenue, Hanwha Aerospace's compound annual growth rate of earnings per share (EPS) for 2025–2028 is expected to be 37%.
Jang added, "The company is securing pipelines in multiple regions based on the most diversified export portfolio, including the K9, Redback, and Cheonmu," and "New export contracts in Saudi Arabia, Spain, the United States, and Poland will act as a driver for share-price gains."