[Click eStock] "HVM, Explosive Demand... Core Value Chain of the World's Largest Space Company"

Yuanta Securities analyzed on the 25th that HV M is a core value chain company of the world's largest space enterprise and is responding to explosive demand with proactive capacity expansion.

HV M is a space value chain company supplying advanced metals to the world's largest rocket developer. The growth factor for the company's space business sales lies in the expansion of advanced metal demand due to the increase in the number of rocket launches and engines by its customers.

Researcher Son Hyun-jung of Yuanta Securities stated in a report on the same day, "Currently, the customer's satellite launch rockets are being launched about 12 times a month," and "As the number of engines increases fourfold compared to before, the demand for advanced metals is expected to increase proportionally." Accordingly, HV M's space business division sales are expected to show a steep growth trend, reaching 13 billion KRW this year and 39 billion KRW next year, up from 5.1 billion KRW last year.

Additionally, Researcher Son Hyun-jung reported that HV M is proactively expanding capacity to respond to explosive demand in space and defense sectors.

He analyzed, "The company plans to expand its advanced metal production capacity (CAPA) from 5,420 tons this year to 22,000 tons in 2025 and 40,650 tons in 2026, a 7.5-fold increase," adding, "Sales capacity secured will be 150 billion KRW from the first expansion and 300 billion KRW from the second expansion." He further predicted, "Advanced metals have a higher average selling price (ASP) and profit margin twice that of special metals, so this expansion will contribute to profitability improvement."

He also stated, "The proactive expansion is based on orders from customers, and sales channels are expected to expand beyond space to aerospace and defense." He explained, "Through the customer's SCOPE, the company supplies advanced metals to Israel's largest defense company, strengthening its position in the defense sector. Since SCOPE is expanding its defense parts business not only in Israel but also in the Middle East and Turkey, amid ongoing conflicts such as Ukraine-Russia and Israel-Hamas, demand for advanced metals is expected to increase."

Due to this increase in demand and capacity expansion, HV M's operating profit is expected to increase 2.3 times next year. Researcher Son forecasted, "This year's sales will be 50.4 billion KRW and operating profit 4.5 billion KRW, increasing by 21.6% and 20.7% respectively compared to the previous year," adding, "Due to a delay in orders from the first-tier vendor, about 7 billion KRW in sales is expected to be deferred to next year, so 2025 sales are projected at 80.4 billion KRW and operating profit at 10.3 billion KRW, increasing by 59.5% and 128.9% year-on-year."

He added, "Considering that advanced metal CAPA will increase fourfold from April 2025, the upside for performance growth is judged to be additionally open."