[Sky Taxi Takes Off] "Hope It's Not a Futile Dream"... UAM Stocks Volatility Alert

Rising Expectations for UAM Policies Boost Stock Prices
Vessel Soars 22%, Kenko Aerospace Jumps 18% in One Month

"UAM in Early Stage, Difficult to Directly Impact Short-Term Earnings"

[Asia Economy Reporter Minji Lee] Stocks of companies related to Urban Air Mobility (UAM) are stirring again. The news that the government plans to prepare a phased implementation plan for UAM commercialization within this month has had an impact. UAM refers to applying air transportation, which was used as a long-distance travel means, to everyday life. It is commonly known as flying taxis. Expected to bring significant changes to daily life, UAM has newly emerged as an investment interest among investors this year. However, the market voices caution, noting that these stocks largely have the characteristics of theme stocks without actual performance.

According to the Korea Exchange on the 4th, over the past month (July 4 to August 3), the stock price of Vessel, which is engaged in unmanned aerial vehicle business, surged 22% from 6,400 KRW to 7,810 KRW. During the same period, NeonTech, involved in the drone business, rose 17.7%, while defense contractor Firstec (25%), aerospace comprehensive solutions company Kenko Aerospace (18%), and Haiz Aviation (8%) also showed significant gains. Defense companies such as LIG Nex1 (21%) and Korea Aerospace Industries (14%) also responded positively. The positive factor was Land, Infrastructure and Transport Minister Won Hee-ryong’s mention at the UAM Strategy Forum held on the 15th of last month that related legislation would be announced this month for UAM commercialization by 2025.

These stocks have shown a pattern of rising whenever expectations for government UAM-related policies increase, followed by sharp declines. They are so-called ‘theme stocks.’ These stocks surged significantly around May when the Yoon Suk-yeol administration took office; for example, Vessel’s stock price soared 112% from April 1 to May 20. Afterwards, as concerns over tightening by the U.S. Federal Reserve (Fed) caused risk appetite to rapidly decline, the stock price fell about 30% from June 2 to early July. Other stocks experienced similar situations. NeonTech rose 15% before dropping about 31%, and LIG Nex1 (2% → -11%) and Haiz Aviation (7% → -21%) also plunged.

KB Securities researcher Sang-guk Lim said, "In the domestic stock market, investment sentiment for UAM-related stocks is concentrated on aircraft development and communication companies," adding, "Although expectations for commercialization are growing, nothing is yet prepared domestically. Besides aircraft development, more consideration is needed for establishing certification systems, regulations, and vertiports (maintenance facilities, charging ports, parking lots, transfer platforms, and other takeoff and landing spaces for flying vehicles)."

However, UAM is not just a futile dream without growth potential. It is expected to establish itself as a cutting-edge transportation means with the appeal of low noise and eco-friendliness. According to market research firms, the UAM market size, estimated at 1.5 billion USD in 2025, is projected to approach up to 1 trillion USD by 2040. Although more time is needed for the market to mature, the growth rate during this period is 67,000%.

Specifically examining companies related to UAM, they can be categorized into five sectors: ▲aircraft and parts ▲navigation and traffic management ▲infrastructure ▲services ▲core technologies. ‘Aircraft and parts’ include companies developing drones and electric power for high-density batteries. ‘Navigation and traffic management’ refers to ensuring smooth communication when aircraft are in motion. ‘Infrastructure’ centers on vertiports. The ‘services’ sector involves passenger and cargo transport management. ‘Core technologies’ include companies developing autonomous flight and aircraft noise and vibration reduction technologies. Recently, large corporations such as Hyundai Motor Company, Hanwha Systems, Lotte Holdings, SK Telecom, and Kakao have formed consortia tailored to these fields to build business capabilities.