Korea Investment & Securities Co. on the 1st said Hanwha Systems will show the fastest profit growth among rivals on the back of expandable orders. It kept its buy rating and raised the target price to 150,000 won from 68,000 won. Hanwha Systems closed at 105,900 won in the previous session.
Jang Nam-hyeon, an analyst at Korea Investment & Securities Co., said, "The estimated compound annual growth rate of operating profit for 2025–2028 is 99.9%, 66 percentage points above the global peer average of 33.9%," and noted, "Similar to Israel's defense company 'Elbit Systems,' the geographic expandability of orders is large." Jang cited as a share price catalyst that Hanwha Systems has already secured multiple export pipelines, mainly in Europe, the Middle East and Asia.
The expansion of air defense network exports is underway. Hanwha Systems supplies multifunction radars to Korea's air defense missile system, accounting for more than 27.5% of the total contract value. Revenue recognition is proceeding sequentially for the Cheongung-II projects with the United Arab Emirates (UAE), Saudi Arabia and Iraq, for which contracts have already been signed.
Jang estimated that if mass-production sales from the three programs are fully reflected, annual revenue would reach 500 billion won with an operating margin of more than 25%. Accordingly, operating profit in the defense segment in 2028 is expected to rise 60.2% year over year to 623.4 billion won.
Jang said, "Discussions are underway for additional exports of air defense missiles, including Qatar's Cheongung-II and the UAE's L-SAM," adding, "Accordingly, supply of multifunction radars will increase in the mid to long term."
Hanwha Systems is also seen to have secured multiple growth drivers for orders. Based on a memorandum of understanding (MOU) signed in 2025 with U.S. Northrop Grumman and Germany's Diehl Defence, direct exports of multifunction radars to overseas air defense missile manufacturers are anticipated.
Hanwha Systems, a supplier of combat management systems (CMS) and radars that account for 15%–18% of total warship construction costs, is expected to directly benefit from Korea's future naval defense exports. In addition, it supplies K2 components, representing a 5%–8% share of total contracts.
Jang added, "By 2027, new K2 tank exports worth 30 trillion won are expected to occur, mainly in the Middle East and Europe," and said, "Accordingly, parts supply contracts will increase."