[Click eStock] "Hanwha Aerospace, Ample Room for Further Gains... Target Price Up"

On the 13th, KB Securities raised the target price for Hanwha Aerospace from 600,000 KRW to 830,000 KRW, citing sufficient potential for further stock price increases despite the already high rise. The investment rating was maintained at 'Buy.'

Jung Dong-ik, a researcher at KB Securities, explained, "Reflecting the upward revision of earnings estimates, the target price has been raised by 38.3% compared to the previous level. Despite the recent stock price increase, the upward revision of the target price secures a 22.4% upside potential compared to the previous closing price, so the investment rating is maintained."

The high profitability of the ground defense sector, which drove last year's performance, is expected to continue this year. Researcher Jung said, "Last year's results, which significantly exceeded expectations, were due to high order margins in ground defense exports, exchange rate increases, productivity improvements from increased production volume, and fixed cost dilution. This trend is expected to strengthen further in the future, excluding exchange rates, and the exchange rate is also expected not to decline significantly for the time being. Accordingly, the operating profit margin of the ground defense sector, which recorded 22.4% last year, is expected to rise to 24.3% this year." He added, "The consolidated operating profit margin will fall from 15.3% last year to 11.4% this year, but this is due to the consolidation of Hanwha Ocean."

Although the stock price has more than doubled since the beginning of this year, there is still ample room for further growth. Researcher Jung stated, "In the case of defense stocks, the correlation between return on equity (ROE) and price-to-book ratio (PBR) is very high, but Hanwha Aerospace has a low PBR compared to its high ROE. The total equity, which was 3.04 trillion KRW at the end of the third quarter last year, increased significantly to 4.98 trillion KRW at the end of the year due to strong fourth-quarter performance and the consolidation effect of Hanwha Ocean. It is expected to increase to 6.3 trillion KRW by the end of this year due to improved performance. Accordingly, the valuation burden may gradually ease."