[Edaily Reporter Kim Hyung-il ] DS Investment & Securities maintained its “Buy (BUY)” investment rating and target price of 94,000 won for HANWHA SYSTEMS(272210), stating that the company has established a foundation for mid- to long-term growth based on improved profitability from defense exports, reduced losses at the Philippines shipyard, and investments in future businesses.

On the 29th, Kang Tae-ho, an analyst at DS Investment & Securities, stated, “Investments in future businesses—such as radar and laser weapons, unmanned surface vessels, and ultra-low-orbit synthetic aperture radar (SAR) and communications satellites—will serve as drivers of mid- to long-term growth.”

In the second quarter of this year, HANWHA SYSTEMS recorded revenue of 1.1 trillion won and operating profit of 103.7 billion won, representing year-over-year increases of 45.5% and 219.1%, respectively. These results exceeded market consensus, with analysts attributing the improvement to the recognition of export revenue occurring faster than expected, increased captive sales in the ICT division, and a reduction in operating losses at the Pili Shipyard.

In particular, the defense division’s export share reached 23%, and its export margin is estimated to have reached approximately 40%. The explanation is that profitability improved due to the expanded delivery of the second K2 tank contract (EC2) to Poland, favorable exchange rate effects, and the full-scale mass production of the M-SAM II multifunction radar (MFR).

Analyst Kang projected that the defense division will post revenue of 2.8 trillion won and operating profit of 251.1 billion won this year, representing year-over-year growth of 17.1% and 9.6%, respectively. However, he predicted that the annual profit growth would be limited due to planned in-house research and development (R&D) investments of approximately 80 billion won in the second half of the year.

He stated, “These investment funds are earmarked for the development of radar and laser weapons, unmanned surface vessel (USV) technology, and ultra-low-orbit SAR and communications satellites—investments aimed at strengthening the foundation for mid- to long-term growth.” He added, “At the Pili Shipyard, while losses are expected to persist in the second half as construction and delivery of the remaining National Security Multi-Purpose Vessels (NSMVs) continue, the scale of those losses will gradually shrink.”

Analyst Kang projected that the company will enter a full-fledged profit growth cycle starting in 2027. He estimated the average annual operating profit growth rate for 2025–2028 at 76.7% and identified the K2 tank EC2 PL, the Saudi MNG, the M-SAM and L-SAM multifunction radars (MFR), Southeast Asian naval vessels, and Middle Eastern laser weapons as key drivers of order momentum. Furthermore, with the selection of a mass-production contractor for the multi-agency ultra-small SAR satellite project scheduled for the second half of the year, he predicted that the company’s space business momentum would be further strengthened if it successfully secures the contract.