[Click eStock] Satrec Initiative Sees Increased Demand for Defense Reconnaissance Satellites... Target Price Set at 120,000 Won

On September 16, LS Securities initiated coverage on Satrec Initiative, assigning a ‘Buy’ rating and a target price of 120,000 won. The firm cited continued growth in demand for defense reconnaissance satellites driven by rising global security threats, and noted that Satrec Initiative is positioned to benefit from this trend.

Jaekwang Lee, a researcher at LS Securities, projected, “The rising demand for defense reconnaissance satellites amid heightened global security threats will drive revenue growth through exports and rental income from the 'SpaceEye-T', which boasts a best-in-class commercial resolution of 25cm.”

He went on to explain, “As of the end of the second quarter this year, the order backlog stood at 557 billion won, up 61% compared to the end of 2025 (346 billion won). This increase is attributed to the export order announced in February this year for satellite imaging acquisition equipment worth 283 billion won.” He added, “Although the contract period lasts around nine years, about 80% of the revenue is recognized during the production period of approximately four years due to the nature of the sales contract, which will contribute to overall sales growth.” He further stated, “Since this is an export contract, double-digit profit margins are expected, which will serve as a driver for overall profitability improvements.”

The analyst also provided a positive assessment of the company's in-house satellite rental business. He remarked, “Growth is also expected from increased rental income for SpaceEye-T, scheduled for orbital deployment in March 2025. According to reports, rental contracts have already been signed for September 2025 and June 2026.”

He stated, “In the case of top-tier reconnaissance satellite rentals, if we infer from similar cases overseas and assume full coverage is sold, total sales during a four to five year contract period could reach approximately 120 billion to 200 billion won. Considering the operating margin in this segment is at least 50%, this will have a significant impact on future earnings growth.”

Additionally, he commented, “Since at least four satellites are required for cluster operation to shorten satellite revisit times, additional deployments could drive further growth going forward.” He explained that the target price was determined by applying the valuation of BlackSky, a U.S. peer.

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