[Click e-Stock] "Hanwha Aerospace, an Endless Order Pipeline"

Kiwoom Securities maintained its "Buy" investment rating on Hanwha Aerospace on January 22 and raised its target price to 1.65 million won. The upward revision is attributed to expectations for order growth driven by a diversified product portfolio.

Lee Hangyeol, a researcher at Kiwoom Securities, explained the rationale for the target price increase, stating, "Given the scale of the order pipeline currently under discussion in Europe and the Middle East, we expect this year's orders to increase significantly compared to last year."

Lee further noted, "Hanwha Aerospace's ground defense division boasts the most diversified product lineup across all weapon systems, including mobility, firepower, anti-aircraft, and ammunition. The flagship pipeline for mobility weapon systems is the Romanian new Infantry Fighting Vehicle (IFV) acquisition project, valued at approximately 5 trillion won, with the contractor expected to be selected in the first half of this year."

He continued, "For firepower weapon systems, we expect a significant increase in orders centered on the K9 and Cheonmu. For the K9, orders are projected to rise this year in European countries such as Spain, Estonia, and Finland. Spain is currently pursuing an artillery modernization project and is discussing a package order worth 7 trillion won, which includes 128 K9 units and numerous ammunition transport vehicles."

Lee also analyzed, "For anti-aircraft weapon systems, Hanwha Aerospace supplies the L-SAM launcher and anti-ballistic missile, which are attracting increasing interest in the Middle East. In the ammunition segment, due to a shortage of propellant supply, the company is considering establishing local production facilities in the United States and Europe. From a mid- to long-term perspective, gradual export expansion is anticipated."

Meanwhile, Hanwha Aerospace's sales in the fourth quarter are expected to reach 8.7921 trillion won, with operating profit forecast at 1.0608 trillion won, both likely to fall short of market expectations.

Lee explained, "On the cost side, one-off labor expenses, including increased transportation costs and performance bonuses not recognized in the first half, will limit profitability improvement. The weak performance of major subsidiaries is also estimated to have negatively affected operating profit improvement this quarter."