KB Securities Co. raised the target stock price for Hanwha Aerospace Co., a defense unit of South Korea’s Hanwha Group, on Tuesday, citing the outlook for improved earnings following its latest supply contract with Poland.

The securities firm raised the target price to 170,000 won ($130) from 150,000 won. The adjustment is attributed to a recent contract that involves Hanwha Aerospace supplying K-9 self-propelled howitzers and maintenance parts to Poland.

“On Monday, Hanwha Aerospace signed the 3.45 trillion won deal with the Polish Armament Agency,” said Chung Dong-ik, an analyst at KB Securities.

The deal, which is the second of its kind after the first in August 2022, resolves uncertainties that surrounded Hanwha Aerospace, such as whether it will be able to win a second deal due to factors such as the results of the Polish general election and an amendment to the law governing the Export-Import Bank of Korea.

“With the supply schedule and price confirmed through the first and second contracts, discussions for the remaining quantity, including local production in Poland, are expected to be finalized through further negotiations, raising expectations for additional contracts,” Chung said.

The analyst projected Hanwha Aerospace to raise 841 billion won in operating profit next year, up from the previous estimate of 827 billion won.

“Hanwha Aerospace’s K-9 self-propelled howitzers are also included in the list of Romania’s 1 trillion won-scale new self-propelled howitzer project, competing with German and Turkish products,” Chung said. “Considering the high operating maintenance costs and the lack of export experience of competitors, there is a high possibility that K-9 will be adopted, giving a positive influence on the stock price.”

Shares of Hanwha Aerospace closed at 138,300 won on Monday, up 1.69 percent from the previous session.

By Pulse

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]