Korean arms maker’s 3,100% rally tests limit of defense boom

Hanoa Jerusps has emerged in South Korea as the best defense shares in the world, as investors are betting on increasing security alliances by US president Donald Trump will stimulate the purchase of weapons, especially in traditional weapons at decades for decades.

The Hanwha Parent Group, the seventh largest group of the largest group of family in the country, hopes to take advantage of the expected boom while selling huge shares of the weapons unit to finance large investments and external comments. The organizers, as well as some investors, are now asking whether he is applying for themselves.

Hanwha Aerospace has increased by more than 3100 % in the past five years, making them the best performance reserves on the global Bloomberg Index. Hyundai Roam, Hyundai Rott, has been the best two winners in the stock market in Asia so far this year, more than weakness in value. They are both unknown outside South Korea, but they play a major role in preparing the country’s forces for a possible battle with its great military neighbor, North Korea.

Last year, Hanwha Aerospace won a deal to sell more self -selling from K9 to Poland, part of the arms supplier agreement between South Korea and the country of Eastern Europe. The growth expectations abroad have helped the market value of the Hanwha Group, which has doubled, since the beginning of the year, to about 73 Korean trillion ($ 50 billion).

“We are witnessing signs of a new cold war as each country seeks to enhance its security,” said Choi Kwanguk, the chief investment official of Thej Asset Management with a score of 3.8 trillion Won in assets under management. “The demand for weapons is now exploding.”

In the midst of enthusiasm, Hanuaoua revealed last week plans for air space to collect 3.6 trillion Won in what will be the largest rights in South Korea ever, according to the data collected by Bloomberg. The company said it will use revenues to invest in external plants and buy risks in foreign partners. This sparked a sale that sent its shares to less than 16 % last Friday. This announcement came in the wake of its purchase of a 9.9 % stake in the construction of Austal Ltd.

Late on Thursday, Korea’s financial service service said that the company’s submission to the sale of shares is “insufficient” to investors. This was repeated by the fears of some of the shareholders who were looking for higher returns and skepticism about the company’s governance. This announcement came after the Hanwha Aerospace Board of Directors agreed to use its cash flow to get a 1.3 trillion Won in the Hanwha Ocean Co. charging unit. Of the subsidiaries including Hanwha Energy, which is fully owned by Hanwha’s three sons.

The stocks fell more than 4 % on Friday afternoon. However, Nomura Securities Eon Hwang said he reserves his “purchase” on stocks.

“Despite the concerns related to governance, we expect the incentives in the short term to pay stock prices,” he said. “We recommend Hanwha on the background of its strong profit growth, new orders abroad and attractive evaluation compared to peers.”

Hanwha shares are traded with only 19 times, which are much lower than their European peers – about 41 times for Rheinmetall Ag or 25 times for Leonardo Spa. The company aims to generate the revenues of 70 trillion Won by 2035, with 10 trillion annual profit, when construction production facilities in Europe, the Middle East, Australia and the United States are completed

Investors said the feature of Hanoa is its experience in producing weapons at relatively affordable prices aimed at defeating the Soviet era systems, including those that Russia published against Ukraine. Hanwha has never stopped producing traditional weapons and armored vehicles, even amid expectations that the war is turning into drones and Amnesty International.

“There are very few countries in the world that produce these types of ancient weapons and nobody expects them to now need them again to war with ground forces,” said Lee Chiaion, Chairman of the Life Asset Board, a long -term fund managed by 1.6 trillion Won in assets. “South Korea definitely has an advantage in producing these old weapons.”

Although South Korea does not sell weapons to countries in the war and denies it provides weapons to Ukraine, it sells to the United States and European governments looking to strengthen its stocks. South Korea is ranked tenth in the world of weapons, according to a report issued by the Stockholm International Peace Research Institute, and aims to become fourth by 2027.

While industrial leaders are much smaller than industrial leaders such as Lockheed Martin or Bae systems, Korean manufacturers have a good reputation in presenting these weapons more quickly than competitors, a point that Polish President Andge Doda noticed.

The President said during his visit to NATO earlier this month: “Why did we buy South Korea weapons? The reason is simple,” the President said during his visit to NATO earlier this month. “We believe that the South Korean partners will be able to provide high -quality weapons within a few months.”

Some analysts saw more space to achieve gains if Hanwha succeeded in taking advantage of the United States’ efforts to revive its shipbuilding industry. In November, Trump told South Korean President Yun Suk Yol that he wanted close cooperation with South Korea in this sector. Last year, Hanoa Ocean bought the Philly ship in Philadelphia in a $ 100 million deal. Bloomberg Intelligence Eric Zhu said that Hanwha may be able to take advantage of the US Navy, which is expected to cost $ 1.06 trillion in shipbuilding over the next thirty years.

Herald van der Lindle, head of the stock strategy at HSBC, said that the shift in global defense spending should bring great benefits over the next few years, but he warned of excessive optimism.

“Korea is exposed to shipbuilding and others. It can gain the market share because the Americans or the Chinese in general will not buy from each other,” he said. “But the same, as with other types of noise, such as artificial intelligence. At a time, you will say that everyone loves artificial intelligence, and if everyone loves it, you should be careful.”

This story was originally shown on Fortune.com

2025-03-28 07:21:00