[Edaily Reporter Shin Ha-yeon ] On the 4th, SKSecurities projected that KOREA AEROSPACE INDUSTRIES(047810)is expected to see substantial earnings growth starting next year due to an expansion in the delivery of complete aircraft, while order momentum is expected to strengthen starting at the end of this year, centered on export contracts for the Korean-made KF-21 fighter jet. The firm maintained its “Buy” rating but lowered the target price from 190,000 won to 150,000 won.

Han Seung-han, an analyst at SKSecurities, stated in a report released that day, “Deliveries of finished aircraft are expected to expand to 50–60 units in 2027 and 80–90 units in 2028,” adding “Domestically, growth is expected to be driven by the resolution of backlogs from the Light Armed Helicopter (LAH) program and the full-scale mass production of the KF-21, while exports are projected to be led by the FA-50 in Malaysia and the FA-50PL in Poland.”

KOREA AEROSPACE INDUSTRIES’ third-quarter consolidated revenue totaled 1.0643 trillion won, a 51.6% increase year-over-year. Operating profit rose 31.9% year-over-year to 79.4 billion won, in line with market expectations of 76 billion won.

One-time expenses of approximately 30 billion won were reflected in the third quarter. These included a 12 billion won provision for bad debts in Iraq, an 11 billion won provision for defect repairs in domestic operations and airframe structures, and a 7 billion won provision for losses on airframe structures. However, this cost burden was offset by a profit improvement of approximately 40 billion won resulting from the revaluation of the exchange rate applied to planned costs due to the decline in the exchange rate.

Revenue from finished aircraft exports totaled 291.4 billion won, a 77.9% increase compared to the same period last year. Although there were no actual export deliveries in the third quarter, growth was driven by progress-based revenue of 152.5 billion won from the Malaysian FA-50 program and 89.9 billion won from the Polish FA-50PL program.

In the domestic business, revenue from KF-21 mass production began to materialize in earnest. Revenue of 212.9 billion won was recorded in the third quarter following the delivery of two KF-21 aircraft. In contrast, no LAH deliveries took place in the third quarter due to the aftermath of engine defects.

One analyst explained, “The LAH is expected to see only two to three additional deliveries in the fourth quarter after deliveries resume in November,” adding, “With approximately 20 units deferred to 2027, this year’s revenue is projected to be around 5.2 trillion won, falling short of the guidance of 5.7 trillion won.”

SKSecurities projected KOREA AEROSPACE INDUSTRIES’ revenue for this year at 5.2037 trillion won and operating profit at 353.6 billion won. These figures represent downward revisions of 5.3% and 12.8%, respectively, compared to previous estimates. In line with the revisions to the annual estimates, the target price was also lowered from 190,000 won to 150,000 won. However, for next year, the firm forecasts revenue of 7.0242 trillion won and operating profit of 610.1 billion won—representing increases of 35.0% and 72.5%, respectively, compared to this year.

The firm also highlighted the potential for expanded order intake. KOREA AEROSPACE INDUSTRIES’ cumulative new orders for the first three quarters of this year totaled 2.2 trillion won, falling significantly short of its annual target of 10.4 trillion won. However, the company secured an undisclosed export contract for finished aircraft worth approximately 1.45 trillion won in the third quarter, and negotiations are underway through the end of the year for the third-phase mass production of the LAH and the KF-21 export contract to Indonesia.

An analyst stated, “With the third-phase LAH mass production contract for 108 units—valued at approximately 3 trillion won—and the KF-21 export contract with Indonesia expected to be finalized by year-end, the company forecasts that it will be able to secure annual orders totaling around 10 trillion won.”

In particular, the company anticipates that the potential for expanding KF-21 exports to the Philippines, Saudi Arabia, and the United Arab Emirates (UAE) will come to the fore next year. An analyst stated, “Along with earnings growth, the visibility of additional KF-21 exports to the Philippines, Saudi Arabia, and the UAE is increasing next year, and we expect the stock price to shift into an upward trend driven by order momentum.”