[Edaily Reporter Hyera Lee ] On the 2nd, DB Securities projected that HYUNDAI ROTEM(064350)would post second-quarter earnings exceeding market expectations, driven by the early delivery of K2GF tanks to Poland and favorable exchange rate effects. The firm also noted that momentum from potential overseas orders remains strong and maintained its “Buy” investment rating and target price of 320,000 won.

Seo Jae-ho, an analyst at DB Securities, stated in a report released today, “The early delivery of the K2GF tanks to Poland is an immediate factor driving an earnings surprise,” adding, “Earnings expectations remain strong amid a favorable order environment, and the only thing that has changed is the lower valuation.”
DB Securities estimated HYUNDAI ROTEM’s second-quarter revenue at 1.8 trillion won and operating profit at 334.1 billion won. These figures represent year-over-year increases of 26.8% and 29.7%, respectively, with operating profit expected to exceed market forecasts.
The key factor driving this earnings improvement is the early delivery of K2GF tanks to Poland. Analyst Seo explained, “The Polish Army is scheduled to receive 28 K2GF tanks in early July and an additional 30 by August, bringing the total to 58 units and reaching a delivery rate of 50%,” adding, “This significantly exceeds the previously reported delivery volume of 31 units for this year.”
He added, “Considering revenue recognition on a percentage-of-completion basis, cost inputs are also expected to increase more than anticipated, so we have reflected this in our earnings estimates,” and projected that “revenue in the Defense Solutions division will increase to approximately 1.1 trillion won.”
He also anticipated continued improvement in profitability. Analyst Seo noted, “First-quarter results demonstrated the high operating profit margin (OPM) of the second contract with Poland (EC2),” and analyzed, “Considering revenue from the K2PL and affiliated tank development projects, profitability during the delivery phase is expected to be higher than that of the first contract (EC1).” He added, “From this year through 2028, the operating profit margin is expected to improve continuously due to repeat order effects and leverage resulting from the expansion of deliveries to India.”
However, he assessed that new orders will become the key growth driver following the early delivery of tanks. Researcher Seo noted, “Political uncertainties in major potential export markets are gradually being resolved: anti-corruption efforts are underway in Iraq; Peru is set to inaugurate a new government in late July; and Romania has signed an intergovernmental quality assurance agreement related to K-defense products.”