[Click eStock] "Hanwha Systems, Continued Earnings Improvement Driven by Strong Defense Exports"

Hanwha Securities forecasted on the 31st that Hanwha Systems will continue its performance improvement trend due to strong defense exports. Accordingly, they maintained a 'Buy' rating on Hanwha Systems with a target price of 23,000 KRW.

Fire Control System of the K2 Tank Supplied by Hanwha Systems

Hanwha Systems recently announced its Q3 earnings, reporting quarterly sales of 639.2 billion KRW and operating profit of 57 billion KRW. These figures represent a 3% increase in sales and a 43.7% increase in operating profit compared to the same period last year.

Analyst Bae Seong-jo from Hanwha Securities stated, "In particular, the operating profit exceeded market expectations (consensus) by 15.6%," and analyzed, "The increase in defense exports improved profit margins, and the effect of cost settlement contributed to the rise in operating profit." However, he explained, "Net profit decreased by 80% year-on-year to 8.1 billion KRW due to one-time foreign exchange losses and equity method losses from Hanwha Ocean."

Analyst Bae added, "The proportion of defense exports in Q3 rose sharply to 20% from 8% last year," and predicted, "With the mass production of the UAE Cheongung missile (M-SAM) and sales in Saudi Arabia reflected, the defense export ratio will exceed 20% next year."

He emphasized, "Cumulative new orders in Q3 are estimated at 1.4 trillion KRW for defense and 130 billion KRW for information and communication technology (ICT)," and stated, "In Q4, new orders such as the 4th mass production of the K2 tank, the 3rd mass production of the Cheongma detection and tracking device PBL (performance-based logistics), the Korean Destroyer eXperimental (KDX)-II combat system, the 2nd mass production of the K21 armored vehicle, and Mirae Asset's next-generation system will be received, significantly increasing Hanwha Systems' defense orders."