Korea Investment & Securities Co. said on the 1st that for Hanwha Aerospace(012450), which recently signed an export execution contract with a Spanish defense company, localization capabilities are being added, expanding the addressable order market to Western Europe and the United States. It maintained an investment opinion of "Buy" and a target price of 2 million won. Hanwha Aerospace's previous day closing price was 1,102,000 won.
Hanwha Aerospace signed an export execution contract for the K9 self-propelled howitzer and other systems with Spanish defense company Indra Sistemas. The contract is part of Spain's self-propelled howitzer modernization program, with a total project size of 37.6 trillion euros. It will introduce 128 self-propelled howitzers, 128 ammunition resupply vehicles, 21 recovery vehicles, 59 command vehicles, and a logistics support system.
Of these, the scope jointly developed by Hanwha Aerospace and Indra is 128 K9-based self-propelled howitzers, 120 ammunition resupply vehicles, 21 recovery vehicles, and 11 command-and-control vehicles. Indra will produce the hulls and electronic systems locally, while Hanwha Aerospace will provide production technology for the K9-series platform and key components.
Jang Nam-hyeon, an analyst at Korea Investment & Securities Co., said, "The importance of localization in defense exports is increasing," and noted, "A localization trend is emerging in Europe and the Middle East, and markets accessible through finished goods direct exports alone are inevitably limited, so it is necessary to raise the addressable order market and win rate through localization strategies and secure follow-up revenue such as technology transfer and maintenance, repair and overhaul (MRO)."
In the case of Hanwha Aerospace, it said that as localization capabilities are added to the product competitiveness of the existing K9 and Cheonmu, the addressable order market is expanding beyond Eastern Europe and Asia to traditional defense powerhouses such as Western Europe and the United States.
Jang said, "In this Spanish project, we expanded the scope of localization beyond simple assembly to include K9-series technology transfer and the development of a local platform, and in the United States, we are promoting local production and supply chain establishment, spurred by winning the self-propelled howitzer modernization project," and analyzed, "These references will serve as differentiating factors in new order processes."
Jang added, "As localization demands from major arms-importing countries continue to strengthen, order expansion in new markets will follow, based on accumulated localization capabilities."