[Click eStock] "HVM, Shedding Costs and Preparing for Takeoff"

Shinhan Investment Corp. analyzed on the 10th that although HVM recorded a loss last year due to increased one-time expenses despite revenue growth, a rebound is expected with the full-scale growth of the space and aerospace defense industries in the future.

HVM's revenue last year was 45.4 billion KRW, a 9.6% increase compared to the previous year, meeting market expectations. However, operating profit turned into a loss of 7 billion KRW.

Seongkyu Heo, a researcher at Shinhan Investment Corp., stated, "Operating profit fell significantly short of estimates due to various expenses including one-time costs," adding, "In particular, about 1.6 billion KRW in stock compensation expenses were reflected in accounting but did not involve actual cash outflow. Additionally, due to a change in accounting firms, conservative accounting estimates were applied, resulting in the setting of inventory asset allowances of less than 3 billion KRW, but since this is a one-time reflection, it will not affect the 2025 performance."

HVM's main growth drivers are the space industry and aerospace defense sector. Especially, the space division's revenue is expected to surge from 7.5 billion KRW last year to over 20 billion KRW by 2025. Researcher Heo evaluated, "Although there is a possibility of timeline delays, this is a conservative estimate, and considering the expansion of delivered items to customers, there is no issue with growth potential."

Furthermore, customers are demanding not only the delivery of materials in Plate and Bar forms but also parts that are fully processed, which is expected to contribute to margin improvement along with value chain expansion in the future. The customer's next-generation launch vehicle plans to carry satellites for commercial launches starting in 2025.

The aerospace defense sector also has significant long-term growth potential. Currently, over 90% of HVM's aerospace defense revenue comes from Israel, and it is expected to exceed 10 billion KRW by 2025. In the domestic market, HVM is conducting national projects for turbine engine localization with Hanwha Aerospace and collaborating with Korea Aerospace Industries (KAI) on titanium material development. Researcher Heo forecasted, "Although development revenue occurs according to milestones, it will contribute significantly to sales starting in 2026."

Ultimately, HVM's stock price is expected to be driven by the revenue growth of the space division. Total revenue in 2025 is projected to increase by 33% year-on-year to 60.4 billion KRW, with space division revenue estimated to grow 174.5% to 20.7 billion KRW. Existing industries and the semiconductor sector are expected to maintain sales, and the aerospace defense sector is anticipated to achieve double-digit growth. Researcher Heo advised, "With an increase in jointly developed items with U.S. customers and an expanded role in material processing, HVM is solidifying its position as a value chain company," adding, "It is necessary to look at the big picture and use stock price volatility as an opportunity."