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Photo = Yonhap news |
[Alpha Biz= Paul Lee] Korea Investment & Securities maintained its “Buy” rating on Hyundai Rotem, citing expectations of improved earnings driven by increased defense spending amid the strengthening of the U.S.'s protectionist stance. The target price was raised by 28.3% to 118,000 KRW, up from the previous estimate. The stock closed at 118,000 KRW the previous day.
The firm stated, “As the U.S. intensifies its protectionist policies, European nations are ramping up defense budgets to bolster their military capabilities. Hyundai Rotem stands to benefit from both reduced competition in non-European regions and increased demand in Europe, expanding its market opportunities.”
With the localization of K2 tank transmissions now complete, Hyundai Rotem is expected to accelerate its marketing efforts in the Middle East starting this year. The Middle Eastern tank export market—driven by replacement demand from Saudi Arabia and the UAE—is estimated to exceed 18 trillion KRW. The company is now well-positioned to enter this market, especially as competitive pressures have eased.
Hyundai Rotem is also expected to respond directly to the rising demand for European weapon systems. Analyst Jang stated, “The company is preparing for a second contract with Poland for K2 tanks, with an estimated order volume of 180 units. Some of these will be locally produced in collaboration with Poland’s state-owned defense company, PGZ.”
Additionally, Korea Investment & Securities noted, “Countries like Slovakia are showing interest in K2 tanks produced in Poland, suggesting that Hyundai Rotem’s production base in Poland could facilitate further export expansion.”
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
