[E-Daily Reporter Kim Hyung-il ] HANWHA INVESTMENT & SECURITIES maintained its “Buy (BUY)” investment rating on KOREA AEROSPACE INDUSTRIES(047810)and raised its target price from 140,000 won to 150,000 won. The firm noted that while third-quarter operating profit met market expectations, driven by expanded sales of mass-produced aircraft, there is potential for a revaluation of the company’s value due to expected earnings improvement in the fourth quarter and the expansion of global fighter jet deliveries.

On the 4th, KOREA AEROSPACE INDUSTRIES reported third-quarter revenue of 1.1 trillion won, a 51.6% increase year-over-year. Operating profit rose 31.9% to 79.4 billion won, with an operating margin of 7.5%. Revenue growth was driven by expanded mass production sales from the KF-21 and FA-50 export programs.

By business segment, domestic revenue reached 500 billion won, an 83.3% increase year-over-year. This was driven by the addition of mass production revenue from the KF-21 and FA-50 replacement aircraft to existing development projects. Revenue from finished aircraft exports also rose 77.9% to 300 billion won. Revenue recognition expanded as the progress rate of the FA-50 export program rose and the Malaysia project entered the delivery phase. Revenue from airframe structures totaled 300 billion won.

The operating profit margin fell by 1.1 percentage points compared to the same period last year. Although one-time expenses of approximately 37 billion won were incurred, including consolidated adjustments, the net effect of these one-time gains and losses was limited as improvements in planned costs due to exchange rate fluctuations resulted in a gain of approximately 40 billion won. The decline in the operating profit margin was influenced by deteriorating profitability in the airframe structures business due to the strengthening of the Korean won.

Chae Woon-saem, an analyst at HANWHA INVESTMENT & SECURITIES, stated, “Third-quarter operating profit met market expectations, driven by expanded sales from the mass production of finished aircraft,” adding, “We are focusing on the potential for a revaluation of the company’s enterprise value stemming from improved fourth-quarter earnings and the expansion of global fighter jet deliveries.”

Fourth-quarter earnings are projected to improve further. HANWHA INVESTMENT & SECURITIES estimated KOREA AEROSPACE INDUSTRIES’ fourth-quarter operating profit at 167.1 billion won. With a concentration of domestic and international mass-production orders for complete aircraft, the figure is expected to exceed the market consensus.

In the medium to long term, the firm views the expansion of global fighter jet deliveries as the key driver of earnings growth. While global fighter jet transaction volumes have been limited compared to ground weapons, new orders have been accumulating, and the production capacity of major manufacturers is gradually expanding. The firm expects that once this expansion in production capacity translates into actual increases in delivery volumes, earnings growth for global fighter jet manufacturers will gain significant momentum.

KOREA AEROSPACE INDUSTRIES’ fighter jet deliveries are also expected to see a step-wise increase starting this year. The firm believes that, in tandem with rising valuations across the global fighter jet industry, KOREA AEROSPACE INDUSTRIES’ corporate value could also be reevaluated. It assessed that the price-to-earnings ratio (PER) based on next year’s earnings is around 20 times, indicating that valuation pressures have eased compared to the past.

New orders are another growth driver. If the company secures the Indonesian order it is targeting by the end of the year, earnings estimates for 2027–2030 could be revised upward. Analyst Chae explained the rationale behind the target price increase, stating, “This is a time when visibility into medium- to long-term earnings growth and expectations for new orders are rising.”