[Edaily Reporter Shin Ha-yeon ] Shinhan Investment Securities assessed that HANWHA AEROSPACE(012450)demonstrated its earnings resilience with record-high second-quarter earnings and stated that new overseas orders will be the key factor driving the stock price going forward. While maintaining a “Buy” rating, the firm lowered its target price from 1.6 million won to 1.38 million won to reflect a valuation adjustment.

Lee Dong-heon, an analyst at Shinhan Investment Securities, stated, “Second-quarter earnings reached an all-time high, driven by expanded exports of ground defense systems and strong performance at Hanwha Ocean,” adding, “Earnings resilience has been confirmed, and new orders will drive the stock price.” He further assessed that “the stock price has reached a comfortable level following a short-term correction.”

HANWHA AEROSPACE’s second-quarter consolidated revenue reached 9.2929 trillion won, a 47% increase year-over-year, while operating profit rose 59% to 1.3655 trillion won. Operating profit exceeded market consensus by 37% and surpassed 1 trillion won for the first time on a quarterly basis. On a standalone basis, revenue reached 2.7321 trillion won and operating profit stood at 525.7 billion won, both exceeding market consensus.

The strong performance was driven by the ground defense division. Increased domestic mass production and export volumes to countries such as Poland and Egypt propelled the results; for the K9 in Poland, following deliveries focused on maintenance items in the first half of the year, the second phase of mass production deliveries is scheduled to begin in earnest in the second half. The order backlog stands at approximately 38 trillion won, securing a supply for more than three years, and analysts note that the order pipeline is expanding with contracts for the K9 in Finland and the Cheonmu in Estonia, as well as orders from the U.S. and the Middle East.

The analyst projected that export momentum will continue into the second half of the year. The company is maintaining its annual delivery targets of more than 30 K9s and more than 40 Cheonmu systems, and explained that performance is expected to be stronger than in the first half as deliveries to Poland, Egypt, and Australia proceed in parallel. The analyst also noted that discussions are underway regarding Spain’s self-propelled howitzer modernization project, the U.S. next-generation self-propelled howitzer program, and orders from the Middle East.

However, the target stock price was revised downward. The analyst explained, “We applied a price-to-earnings ratio (PER) of 30.4 times—calculated by adding a 70% premium to the average PER of domestic defense companies from 2022 to 2024 to the estimated earnings per share (EPS) for 2027,” adding, “This reflects the reality of the earnings cycle and long-term growth potential.” Nevertheless, the analyst emphasized, “Despite the high volatility of overseas order acquisition, global defense demand and medium- to long-term growth are clear.”