[E-Daily Reporter KIM YOON-JEONG ] KIWOOM Securities assessed that while HYUNDAI ROTEM(064350)’s second-quarter earnings are expected to fall short of market expectations, its medium- to long-term growth trajectory remains valid given its large order pipeline, including tank projects in Iraq and Peru. The firm maintained its “Buy” rating and target price of 340,000 won.

On the 16th, Lee Han-gyeol, an analyst at KIWOOM Securities, stated, “We forecast second-quarter operating profit to be 240.7 billion won, falling short of market expectations,” adding, “We assess that the pace of profitability improvement in the Defense Solutions division has slowed.”
KIWOOM Securities projected that HYUNDAI ROTEM’s second-quarter revenue would reach 1.7384 trillion won, a 22.6% increase year-over-year, while operating profit would decline by 6.5% to 240.7 billion won. The operating profit margin was estimated at 13.8%.
With the second phase (EC2) of K2 tank production in Poland proceeding smoothly, revenue in the Defense Solutions division is expected to reach 921.3 billion won, a 21.0% increase year-over-year. However, the firm predicted that profitability improvements would be limited due to the inclusion of contingency reserves during the early stages of production and a reduction in the scale of the remaining EC1 projects compared to the previous quarter. The Rail Solutions and Eco Plant divisions are expected to continue their steady growth.
Uncertainty regarding new orders is expected to gradually subside starting in the second half of the year. HYUNDAI ROTEM is pursuing tank projects in Iraq and Peru as its primary targets for new orders this year.
The analyst explained, “Following the signing of a framework agreement with Peru late last year to supply 54 K2 tanks and 141 K808 wheeled armored vehicles, negotiations for the final contract are currently underway,” adding, “With Peru’s recent elections concluded and a new cabinet formed, we believe negotiations will be finalized in the second half of the year.”
He continued, “We expect the decision-making process for the K2 tank project in Iraq to take some time due to the impact of the war in the Middle East,” but noted, “However, considering Iraq’s relations with neighboring countries, the demand for armored forces remains valid, so we believe there is a high likelihood that a contract will be signed within this year.”
The EC3 project in Poland and the next-generation tank project in Romania were also cited as additional growth drivers. The firm projected that once the test evaluation of the K2ME tanks, delivered in March of this year, is completed in the second half of the year, efforts to penetrate the Middle Eastern market will begin in earnest.
KIWOOM Securities projected that HYUNDAI ROTEM’s revenue for this year would reach 7.2185 trillion won, a 23.6% increase year-over-year, while operating profit would rise 13.5% to 1.1415 trillion won. The operating profit margin was estimated at 15.8%.
The analyst stated, “Due to uncertainty regarding the order timeline for major projects this year, the stock price has corrected by nearly 38% from its annual high,” adding, “Considering that the size of the order pipeline expected to be secured from the second quarter of 2026 through 2027 is more than three times the current order backlog, the growth trajectory is clear. Therefore, we recommend increasing exposure from a medium- to long-term perspective.”