April 23, 2024

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[THE INVESTOR] Korea Aerospace Industries will be hurt by the corruption scandal that is being probed by prosecutors, said Eugene Investment and Securities on July 18, downgrading the recommendation to a “hold” and lowering the target price to 57,000 won (US$50.59) from 79,600 won. 

Not only are there charges of embezzlement but also concerns over the capacity of its multi-purpose helicopter Surion are mounting, said analyst Lee Sang-woo. As its earnings are heavily dependent on the indigenously developed helicopter, uncertainties could grow, cautioned the analyst.

This controversy can be an obstacle for KAI’s overseas expansion, and whether it can win more orders from international clients will be a key factor for investment, noted Lee, lowering the second-quarter revenue and operating profit estimates by 17 percent to 717 billion and 68.1 billion won, respectively.

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