[Click eStock] "Hanwha Aerospace, Steady Performance Continues... Target Price Up"

Target Price Raised from 500,000 KRW to 620,000 KRW

Yuanta Securities on the 14th raised the target price for Hanwha Aerospace from 500,000 KRW to 620,000 KRW, expecting solid performance to continue for the time being. The investment rating was maintained as 'Buy.'

Researcher Lee Seung-woong of Yuanta Securities explained, "Based on an overseas order backlog worth 22 trillion KRW, steady performance in ground defense is expected to continue for the time being. Considering the synergy in marine business with Hanwha Ocean and Hanwha Systems, there is ample room for stock price appreciation."

Hanwha Aerospace recorded sales of 4.8 trillion KRW in the fourth quarter of last year, a 56% increase compared to the same period last year, and operating profit of 892.5 billion KRW, up 222.1%. The researcher analyzed, "It recorded a surprise by significantly exceeding the consensus (average securities firm forecast) for three consecutive quarters. Ground defense and Hanwha Systems continued to drive growth. The ground defense sector posted strong results with sales up 74.5% to 3.4 trillion KRW and operating profit up 172% to 869.8 billion KRW." Domestically, production volume was concentrated, and overseas exports accounted for 55.0% of sales, driven by recognition of 40 K9 units for Poland and 12 Chunmoo units, leading profit growth. Hanwha Systems recorded sales of 933.5 billion KRW, up 19.4%, and operating profit of 29.1 billion KRW, up 60.4%.

The aerospace division posted sales of 595.2 billion KRW, a 38.9% increase year-on-year, but continued to report an operating loss of 46 billion KRW. The researcher explained, "Sales increased due to higher volume, but operating losses in the international joint development project (RSP) increased due to higher sales of Geared Turbofan (GTF) engines."

Exports are expected to increase this year as well. Yuanta Securities projected Hanwha Aerospace's performance this year at sales of 25.1 trillion KRW and operating profit of 2.7 trillion KRW, representing increases of 123.1% and 56.3% respectively compared to the previous year. The researcher forecasted, "While the domestic mass production business continues to perform well, export volumes are expected to increase. More than 70 K9 units and over 50 Chunmoo units for Poland will be delivered this year, and supply of K9 units to Australia and Egypt will also be in full swing. Considering the high profitability of overseas exports, the margin rate is expected to remain similar to last year."