[Click eStock] "Hanwha Aerospace Resumes Overseas Orders"

[Asia Economy Reporter Ji Yeon-jin] Kiwoom Securities announced on the 26th that it maintains a buy investment opinion and a target price of 63,000 KRW for Hanwha Aerospace, expecting overseas orders to resume centered on the defense K9 self-propelled howitzer, noting that despite inevitable earnings decline in the civilian sector, the company’s structural improvement achievements stand out, and the long-term growth potential of the satellite and space business will be highlighted.

Kim Ji-san, a researcher at Kiwoom Securities, said, "Hanwha Aerospace’s stock price has been weak this year despite continuous strong performance because the overseas orders gap in the defense sector has been prolonged in the COVID-19 environment, and concerns about earnings decline next year are reflected due to the base effect following dramatic results in the civilian sector." He added, "In defense, there is a high possibility of securing the K9 project order for Australia within this year, and attention should be paid to overseas events in the first half of next year, such as the delayed Middle East Biho Complex project order and the selection as the preferred bidder for Australia’s Land 400 project."

Researcher Kim said, "In the civilian sector, Techwin is achieving high growth in the European B2B market following North America amid sanctions on Chinese products," and added, "Precision Machinery, the global No.1 in mid-speed chip mounters, plans to strengthen its high-speed lineup while diversifying markets outside China. Power Systems secured the highest-ever orders mainly for compressors, establishing a growth foundation for next year, and high oil prices will act as a favorable environment."

Hanwha Aerospace is also expected to have more business participation opportunities as it leads in launch vehicle engine capabilities, following additional launches of Nuriho and satellite launch plans in the public sector.

The company’s operating profit for the fourth quarter is expected to decrease by 25% year-on-year to 77.9 billion KRW. Although defense is expected to perform better than expected mainly in domestic sales, the civilian sector is likely to face significant cost factors including performance bonuses.