April 16, 2024

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[THE INVESTOR] Hanwha Techwin has secured earnings stability and growth momentum, said Mirae Asset Daewoo on Feb. 20, maintaining a “buy” recommendation and 62,000 won (US$53.87) target price. 

With its largest stakeholder changing to Hanwha Group, the company quickly stabilized and had its growth bolstered by the effect of the acquisition, said analyst Park Won-jae. Consolidated with Hanwha Defense and Hanwha System, new businesses, such as unmanned vehicles and driving systems for electric vehicles, are highly likely to be undertaken aggressively, forecast the analyst. 

Costs in the engine division and the declining profitability in the defense sector will suppress improvement in operating profit in comparison with the growth of size, but the research and development cost is for future growth and, in the latter half, export in the defense division is expected, added Park. 

NH Investment and Securities agreed that the defense company’s earnings will improve in the latter half, maintaining a “buy” recommendation. 

Its 279 billion won (US$243 million) contract with Poland to export self-propelled artillery will be recognized in the second half, and more contracts with Finland and India are expected in the first half, noted analyst Yu Jae-hun.

The company is generating stable profits across its defense industry sector, but its energy and industrial equipment divisions remain in the red, noted the analyst. The loss will decline but is a negative factor for the company’s value, added Yu, lowering the target price to 54,000 won. 

By Hwang You-mee (glamazon@heraldcorp.com)