"Hanwha Systems Upgraded to 'Buy' on Export Expectations" [Click e-Stock]

DB Financial Investment Upgrades Rating to 'Buy'
Citing Growth Potential and Other Factors

On July 14, DB Financial Investment upgraded its investment rating on Hanwha Systems to 'Buy', while lowering its target price from 145,000 won to 90,000 won.

Seo Jaeho, a researcher at DB Financial Investment, stated, "We lowered the target price in consideration of the overall decline in sector expectations," but added, "We upgraded the investment rating as Hanwha Systems has secured upside potential following the recent correction, and the growth prospects in the space, shipbuilding, and defense sectors remain robust."

Researcher Seo explained that Hanwha Systems inspires expectations for exports through its diverse pipeline. He said, "Hanwha Systems' defense pipeline is applied to most weapons, including ground defense, aerospace, air defense, and naval vessels. The company holds a significant share across the defense industry, so it benefits when upstream companies receive orders."

He continued, "Direct export business is also being established, such as the ASEA radar for light attack aircraft with Leonardo and a radar business agreement (MOU) with Diel Defence. In addition, Hanwha Systems currently possesses satellite production facilities at the Jeju Space Center established last year. The space business is also expected to become more concrete, starting with the selection of multi-ministerial small satellite operators in the third quarter of this year, followed by satellite projects led by the Ministry of National Defense and the Korea Aerospace Administration."

He also predicted that the company's second-quarter results this year would slightly surpass market expectations, forecasting sales of 854 billion won and operating profit of 63 billion won. This represents year-on-year increases of 11.2% and 92.8%, respectively. Researcher Seo explained, "This is due to high-margin effects in the defense sector from strong export sales recognition, such as Cheongung-II." He also noted that the export share of defense sales will remain high at 30.4%, and that the high-margin effect of the second phase K2GF project for Poland will continue, with the operating profit margin (OPM) of the defense business division expected to reach 13.7%.

This content was produced with the assistance of AI translation services.