[Click eStock] "Cots Technology, an Undervalued Defense Company"

NH Investment & Securities analyzed on the 17th that COTS Technology is undervalued compared to domestic defense companies. No investment opinion or target price was provided.

COTS Technology is a specialized company in embedded systems for defense. It has localized defense SBC (SBC: Single Board Computer)-based embedded systems and secured key clients such as LIG Nex1, Hyundai Rotem, and Hanwha Systems.

Researcher Kang Kyung-geun of NH Investment & Securities explained, "Performance growth is expected due to strong exports of weapons in COTS Technology's main fields such as the K2 tank and Cheongung-II," adding, "They have been involved since the initial development project of the K2 tank and are supplying 18 items including integrated vehicle control computers."

As of the first half of this year, COTS Technology's order backlog stands at 105.1 billion KRW. He stated, "With export contract disclosures from clients, the company's order volume growth is expected to accelerate further," and evaluated, "Especially, export volumes are not subject to cost verification, which is positive for profitability improvement."

He emphasized, "With the recognition of K2 delivery volume sales in the second half, performance growth will accelerate," and highlighted, "The price-to-earnings ratio (PER) is 11.1 times, which is significantly undervalued compared to the domestic defense peer average of 22.9 times."