[Click eStock] "Hanwha Aerospace to Emerge as the Korean Version of Lockheed Martin"

KB Securities Report

[Asia Economy Reporter Minji Lee] KB Securities maintained a buy rating on Hanwha Aerospace on the 26th and set a target price of 92,500 KRW, up 26% from the previous target.

Jung Dong-ik, a researcher at KB Securities, said, "Hanwha Aerospace has a growing potential to become the Korean version of Lockheed Martin due to the international competitiveness of its defense products and synergies among defense businesses within the group," adding, "Recent business adjustments in the defense sector and large-scale overseas orders support this potential."

Hanwha Aerospace recently announced a business restructuring plan through multiple disclosures. The core of the plan is to absorb its 100% subsidiary Hanwha Defense and then acquire the Hanwha defense division after its spin-off (768.1 billion KRW). To secure funding and reorganize the business accordingly, it plans to sell Hanwha Precision Machinery (520 billion KRW) and Hanwha Power Systems (210 billion KRW) to Hanwha.

Researcher Jung explained, "This business restructuring will strengthen the identity as a total defense solution company, and synergies are expected from joint sales, integrated development, and shared infrastructure utilization," adding, "Hanwha's defense division currently produces various explosives and ammunition, Hyunmoo ballistic missiles, Chunmoo multiple launch rockets, lasers, underwater acoustic sensors, and navigation devices."

Following the signing of a basic contract with the Polish government to supply 648 units of the K9, the possibility of a significant increase in defense sales and profits has grown. Researcher Jung said, "Assuming 48 units are produced and supplied in Korea and 600 units are produced and supplied by a local joint venture, if the main contract is signed, we plan to revise our estimates accordingly," analyzing, "Sales to Poland are expected to reach 3.94 trillion KRW over the next 10 years."