Hana Securities on the 4th said Hanwha Systems will grow into a composite defense platform company that combines defense, space, and shipbuilding. It initiated coverage with a "buy" rating and a target price of 128,000 won. The previous session's closing price was 97,400 won.
Hana Securities analyzed that the core competitiveness of Hanwha Systems' defense institutional sector lies in battlefield electronics rather than platforms.
Researcher Chae Unsam at Hana Securities said, "Hanwha Systems mainly supplies radar, electro-optics, combat systems, command and control, communications, avionics, and fire-control systems installed on major domestic weapons systems," and noted, "The multifunction radar is installed on Cheongung-II and L-SAM, and the KF-21 is equipped with an AESA radar and avionics."
Chae added, "For ground weapons systems such as the K2, K9, and K21, fire-control systems and electro-optical equipment are included, and for warships, combat systems, shipborne radar, and data links are installed."
Chae assessed that the expansion of mass production and exports by domestic defense companies translates into revenue growth for Hanwha Systems' defense institutional sector. As of the first quarter of this year, the total order backlog was 12.2 trillion won, of which the defense order backlog was about 9.3 trillion won. That amounts to more than three years of work.
Chae said, "The more Hanwha Aerospace's K9 and Cheonmu, Hyundai Rotem's K2, Korea Aerospace Industries (KAI)'s KF-21 and FA-50, and Hanwha Ocean's naval ship businesses expand, the more Hanwha Systems' battlefield electronics volumes will increase as well," adding, "In the short term, the losses at the Philippine shipyard act as a burden on consolidation results, but if normalization comes in 2028, expectations for companywide profit growth at Hanwha Systems will expand in earnest."