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The export model of the "Cheongung-II Multifunction Radar" developed by Hanwha Systems. (Photo: Hanwha Systems) |
[Alpha Biz= Kim Sangjin] Daol Investment & Securities raised its target price for Hanwha Systems from 24,000 KRW to 32,000 KRW, reflecting new orders and synergies from the acquisition of Phil Korean Shipyard. The investment firm also upgraded its investment rating from “Hold” to “Buy.”
On January 8, Daol stated, “We have increased Hanwha Systems’ three-year forward (FWD) operating profit estimate by approximately 10% due to the inclusion of Saudi Arabia’s Cheongung orders and domestic business performance.”
However, the fourth-quarter earnings forecast was slightly lowered, with estimated revenue of 862.4 billion KRW (a 10% year-on-year increase), operating profit of 54.9 billion KRW (a 401% increase), and net income of 67 billion KRW (a 53% increase).
Daol noted, “The acquisition of Phil Korean Shipyard, which was completed on December 20, 2024, will reflect short-term losses, but profitability is expected to turn around by 2026. The acquisition will also generate synergy in integrated combat systems.”
Additionally, Daol highlighted, “In December 2024, Hanwha Systems secured a total of 383.8 billion KRW in orders for KDX-II performance upgrade combat systems and Ulsan-class Batch-4 combat systems, reaffirming its dominant position in domestic surface combat systems. This reinforces the strategic rationale behind Hanwha Systems’ 60% stake in Phil Korean Shipyard.”
The report emphasized Hanwha Systems’ potential growth in K-defense exports, the U.S. new-build ship market, and maintenance, repair, and operations (MRO).
Daol further explained that 2025 performance estimates will rise, reflecting new orders. “LIG Nex1 signed a contract for the Saudi Cheongung system in February, while Hanwha Systems secured a 1.2 trillion KRW radar deal in July. Additionally, LIG Nex1’s September contract for Iraq’s Cheongung system includes a pending 1 trillion KRW radar order for Hanwha Systems,” they noted, adding, “Further earnings upgrades are anticipated.”
AlphaBIZ Kim SangJin(letyou@alphabiz.co.kr)
