Hanwha Aerospace Stock Fires Up Again After Hitting Rock Bottom

Four Consecutive Gains After Hitting a 52-Week Low
First-Ever Entry into the "1 Trillion Won Club" in Q2
Performance Expected to Accelerate in the Second Half... Order Momentum Building

Hanwha Aerospace has hit bottom and is now showing a rebound. After recording a 52-week low at the end of last month, the company has managed to recover, buoyed by strong earnings, and has also regained its status as a "Blue-Chip" stock. With expectations that earnings will improve further in the second half of the year, attention is focused on whether this upward trend will continue.

According to the Korea Exchange on August 5, Hanwha Aerospace closed at 1,004,000 won, up 9.25% from the previous day, regaining its blue-chip status for the first time in about a month based on the closing price.

Hanwha Aerospace experienced a slump throughout last month, with its share price dropping below 1 million won and even falling to 783,000 won during trading on July 29, marking a 52-week low. Since then, the company has successfully rebounded, posting gains for four consecutive trading sessions.

This strong rebound has been attributed to an earnings surprise in the second quarter. Hanwha Aerospace recorded an operating profit of 1.3655 trillion won in the second quarter, up 58.5% from a year earlier—marking the first time the company has joined the '1 trillion won quarterly operating profit club'. Revenue surged by 47.2% to 9.2929 trillion won, while net profit jumped 277.5% to 1.0805 trillion won.

Jang Namhyun, a researcher at Korea Investment & Securities, said, "Hanwha Aerospace's second-quarter operating profit exceeded the consensus (the average forecast of securities firms) of 996.2 billion won by 37.1%. Both consolidated subsidiaries Hanwha Systems and Hanwha Ocean achieved earnings surprises, and the operating margin of the land defense segment also exceeded market expectations." In particular, it is positive that concerns over the profit margin of export business have been eased. Jang added, "The overseas defense business posted an operating margin of more than 38%, with the land defense segment driving high profitability. In the end, these results dispelled concerns about profit margin erosion stemming from the expansion of non-Poland sales revenue."

With even better earnings forecast for the second half of the year, this recovery is expected to further support the share price. Choi Junghwan, a researcher at Daishin Securities, said, "We expect a typical low-then-high earnings trajectory, as second-half sales recognition for the K9 self-propelled howitzer in Poland, Australia, and Egypt will increase compared to the first half." He added, "As for orders, negotiations with Spain and the Middle East are ongoing, and the shortlist announcement for the U.S. self-propelled howitzer program is scheduled for August, so order and performance momentum will be concentrated in the second half."

Jang noted, "With deliveries of the K9 self-propelled howitzer to Poland resuming in the second half, and increased revenue recognition from the Egypt and Australia projects, sales in the land defense segment are expected to grow by 32.3% year-on-year in the second half. The expansion of highly profitable overseas sales is set to improve second-half operating profit by 44.5%," he said.

The series of share price corrections has also alleviated valuation burdens. Han Youngsoo, a researcher at Samsung Securities, analyzed, "Although recent corrections have not completely removed valuation concerns in the domestic defense sector, mainly due to steep price drops among overseas competitors, Hanwha Aerospace is inevitably affected by the overall valuation decline in the industry and by the share price drop of its subsidiaries." He continued, "However, there is still ample upside potential compared to the current share price. The present valuation is discounted relative to domestic peers. Even among large domestic companies, Hanwha Aerospace is one of only a few firms whose upside potential remains justifiable without a special premium compared to overseas players," he added.

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