[Edaily Reporter PARK MIN ] DS Investment & Securities stated that the entry of HANWHA AEROSPACE(012450)’s K9 self-propelled howitzer into the U.S. market signifies more than just a single order. The firm raised its target price from 1.67 million won to 1.83 million won and maintained its “Buy” rating. This represents an upside potential of 68.7% compared to the closing price of 1.085 million won on the 21st.

Kang Tae-ho, an analyst at DS Investment & Securities, explained the rationale behind the target price increase in a report published today, stating, “We calculated the target price by applying a 10% premium to the 2027 price-to-earnings ratio (PER) of the global peer group, based on the company’s proven competitiveness following its success in winning orders against numerous global ground defense contractors, as well as the potential to enter the new wheeled artillery market and secure market share.”

Previously, Hanwha Defense USA secured a contract for the U.S. Army’s MTC prototype project with its K9MH. The initial order consists of six prototypes and includes an option to order an additional 12 units over the next four years. The cumulative contract value, including all options, amounts to approximately $260 million (about 371.5 billion won).

DS Investment & Securities estimated that the total scale of this project, including mass production and maintenance, repair, and overhaul (MRO), could reach approximately 500 units, worth 10 trillion won. The firm also analyzed that there is a possibility of additional business opportunities being discussed in the future, such as the supply of propellant charges and wheeled model packages to be produced in the U.S.

The firm particularly highlighted the symbolic significance of this contract award, as it signifies that a South Korean-made complete weapons system has entered the test and evaluation phase in the United States, the world’s largest defense market. Hanwha Defense USA was selected as the sole contractor after competing against Rheinmetall, KNDS·Leonardo DRS, and Elbit.

DS Investment & Securities predicted that since the K9MH was selected over KNDS’s “César”—currently regarded as the top wheeled self-propelled howitzer in the export market based on cumulative orders—it will serve as an important reference point for future global wheeled self-propelled howitzer projects.

In particular, the firm assessed that this contract is significant because it secures a foothold for expanding the business scope across the entire U.S. artillery system—starting with the K9MH—to include ammunition supply systems, propellant charges, MRO, long-range gun barrels, and tracked self-propelled howitzers.

Furthermore, HANWHA AEROSPACE has signed a joint research and development agreement—separate from the MTC program—to integrate a 155mm 58-caliber gun designed by the U.S. government into the K9 series platform. DS Investment & Securities assessed that if this R&D proceeds successfully, the U.S. could consider replacing its currently operational M109 self-propelled howitzers with the K9A2.

Beyond its U.S. business, HANWHA AEROSPACE’s export pipeline is substantial.

DS Investment & Securities estimated the total value of the export pipeline for 2026 at 36.9 trillion won. Specifically, this includes 15 trillion won for Saudi Arabia’s ground weapons systems, 10 trillion won for the U.S. K9MH program, 7 trillion won for Poland’s third K9 contract, 2.5 trillion won for Spain’s K9 program, 400 billion won for Estonia’s K9 program, and 2 trillion won for the UAE or Saudi Arabia’s L-SAM program.

In particular, negotiations for the Saudi ground weapons system project are expected to resume once the war situation has concluded. The projected timelines are as follows: the third K9 contract with Poland in December; the K9 project with Spain in July–August; additional K9 purchases by Estonia in the third or fourth quarter; and the L-SAM project in the fourth quarter.

Growth potential was also identified in the wheeled self-propelled howitzer market. According to the report, based on current export contracts, KNDS’s César holds the largest share in the wheeled self-propelled howitzer market at 43%, followed by the SH-15 at 17%, ATMOS at 13%, NORA B-52 at 12%, and Archer at 6%.

The trend of improving financial performance is also expected to continue. HANWHA INVESTMENT & SECURITIES projected HANWHA AEROSPACE’s revenue for this year at 32.3865 trillion won and operating profit at 4.6861 trillion won. Compared to last year, this represents a 21.3% increase in revenue and a 51.7% increase in operating profit.

By business segment, this year’s operating profit for the ground defense division is projected to reach 2.2915 trillion won, a 14.5% increase year-over-year. The operating profit margin for ground defense is expected to remain high at 24.0%. HANWHA SYSTEMS’ operating profit for this year is forecast at 232.2 billion won, while Hanwha Ocean’s is projected at 2.2595 trillion won.

This upward trend in performance is expected to continue into 2027. Revenue is projected to reach 35.0193 trillion won, and operating profit 5.6520 trillion won—representing increases of 8.1% and 20.6%, respectively, compared to this year. By 2028, revenue is projected to expand to 39.0580 trillion won, with operating profit reaching 6.7840 trillion won.