April 23, 2024

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[THE INVESTOR] Hanwha Aerospace’s earnings in the second quarter will be well below market expectations, said KB Investment and Securities on July 4, lowering the target price to 30,000 won (US$26.90) from 37,000 won.

Its revenue in the period will slide 3 percent on-year to 1.01 trillion won, with operating profit declining 56.4 percent to 10.1 billion won, estimated analysts Jeong Dong-ik and Jang Mun-jun.

Hanwha Techwin’s earnings will improve and the defense subsidiaries’ revenues will increase while costs of the jet engine guide turbofan project will decline and lift the bottom line from the previous quarter, but not as much as expected, they said. 

Thawing inter-Korean relations could burden investor sentiments on defense stocks, but as exports are the key variable in the stock price and earnings, the effect will be limited, according to the analysts. 

A merger of Hanwha S&C and Hanwha System will create synergy and boost the stock price, they said, maintaining a “buy” recommendation. 

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