[Click eStock] Hanwha Systems, Earnings Improvement Expected... Target Price Raised to 26,500 KRW

Kiwoom Securities raised the target price for Hanwha Systems from 25,000 KRW to 26,500 KRW on the 31st, citing expected performance improvements due to the full-scale export business. The investment rating was maintained as a buy.

In a report on the same day, analyst Han-gyeol Lee of Kiwoom Securities stated, "Starting from 2025, the Saudi export business is also expected to begin in earnest, and we believe the growth trend in performance will continue due to the increasing proportion of defense exports." He analyzed, "We forecast 2024 sales of 2.8702 trillion KRW and operating profit of 224.9 billion KRW."

Hanwha Systems recorded an earnings surprise with 687.3 billion KRW in sales and 79.8 billion KRW in operating profit in the second quarter. Analyst Lee said, "We believe strong performance was driven by sales expansion and profitability improvement across all business sectors," adding, "In particular, the significant increase in the proportion of the highly profitable export business is estimated to have contributed to the performance improvement."

He expected the trend of profitability improvement in the defense and ICT sectors to continue in the second half of the year. However, since the defense sector's own investment costs are estimated to increase further in the second half, the extent of performance improvement is expected to decrease compared to the first half.

He said, "If the acquisition of the US Philly shipyard, jointly pursued by Hanwha Systems and Hanwha Ocean, is completed within this year, it is expected to be reflected in consolidated earnings from next year." He added, "The possibility of participating in US Navy projects is a positive factor, but it will take some time for the Philly shipyard's performance to stabilize."