[Click eStock] "Hanwha Aerospace, a Stable Growth Stock"

[Asia Economy Reporter Kwon Jae-hee] Daishin Securities maintained a 'Buy' rating on Hanwha Aerospace on the 8th, setting a target price of 59,000 KRW.

In the fourth quarter of last year, Hanwha Aerospace reported consolidated sales of 1.9738 trillion KRW and operating profit of 81.1 billion KRW, representing increases of 14% and 6% respectively compared to the previous year. Market expectations were also exceeded by 5% in sales and 6% in operating profit.

This year, Hanwha Aerospace's sales are expected to achieve balanced growth across all business divisions. However, operating profit is anticipated to be affected by increased costs such as logistics, materials, and development expenses.

By business segment, Defense's order backlog at the end of 2021 stood at 4.8 trillion KRW (3.6 trillion KRW domestic, 1.2 trillion KRW overseas), with overseas sales expected to increase in 2022 following the early-year 2 trillion KRW order for Egypt's K-9. The selection of a contractor for Australia's LAND 400 armored vehicle project in the first half of the year is also a promising factor. For Techwin, the power systems division continues to see sales growth. Precision machinery is normalizing after a surge in demand for chip mounters in China, but margin decline is expected due to increased material and logistics costs. Aerospace is expected to improve due to the reopening effect, though the peak loss is likely to remain.

Lee Dong-heon, a researcher at Daishin Securities, stated, "Hanwha Aerospace continues to experience balanced growth across all business divisions," and interpreted that "despite sales stagnation in 2022, defense exports stood out."

He added, "With reduced risks related to subsidiary listings, a decrease in conglomerate discount is also expected," describing it as "a stable growth stock including defense and civilian sectors."