Hanwha System reported a significant growth in performance this year as defense exports increased in the first quarter, prompting securities firms to consecutively raise their target share price for Hanwha System. The closing price of Hanwha System on the previous trading day was 39,300 won.
NH Investment & Securities raised its target price for Hanwha System from the previous 48,000 won to 53,000 won on the 30th, while maintaining a 'buy' investment recommendation.
Hanwha System's revenue for the first quarter of this year reached 690 billion won, marking a 26.8% increase compared to the previous year. Revenue from the defense sector amounted to 430 billion won, up 12.7% from the previous year, attributed to increased exports of the Cheongung II multifunction radar to the Middle East, Poland's K2 fire control system, and domestic production projects.
From the first quarter of this year, the consolidation of Hanwha Philly's revenues has contributed to the overall increase. Hanwha System's operating profit also rose by 27.9% to 58 billion won compared to the previous year. Lee Jae-gwang, a researcher at NH Investment & Securities, noted, 'The performance growth is expected to be driven by the reflected results of the already ordered defense exports,' adding, 'In the long term, the expansion of production capacity at Hanwha Philly and the increasing equity stake in Australia will lead to an expansion of contracts for U.S. Navy vessel construction and maintenance, repair, and overhaul (MRO) projects between South Korea and the U.S.'
Not only NH Investment & Securities, but also that day iM Securities (26,000 won → 48,000 won), MERITZ Securities (26,000 won → 46,000 won), Kiwoom Securities (36,000 won → 46,000 won), DB Securities (30,000 won → 46,000 won), Kyobo Securities (30,000 won → 44,000 won), and Shinhan Investment & Securities (30,000 won → 40,000 won) simultaneously raised their target prices.
However, there are analyses indicating that stabilizing the Philly shipyard is necessary. Lee Ji-ho, a researcher at MERITZ Securities, stated, 'While the Philly shipyard presents a positive investment opportunity in the long term as it aligns with the U.S. strategy of decoupling the shipbuilding industry from China and the increased demand for maritime defense, in the short term, a decline in earnings per share (EPS) due to losses and a rise in the multiples (enterprise value ratios) are unavoidable.'
Lee Dong-heon, a researcher at Shinhan Investment & Securities, commented, 'The expansion of the Philly shipyard and the increase in exports, along with expectations for U.S. contracts, are positive, but results need to be confirmed within the year' while adding, 'The timing of the group's new business investments and asset fluctuations, along with the stabilization of the Philly shipyard, are variables.'