Amid global tensions, Korea's arms exports hit all-time high
Korea's defense exports surpassed $4 billion for the first time last year as the top industry leaders, namely Hanwha Aerospace, Hyundai Rotem, LIG Nex1 and Korea Aerospace Industries, enjoyed record-setting annual performances while continuing to expand their presence on the global stage amid ongoing geopolitical uncertainties worldwide.
According to data from the Korea International Trade Association, the country's weapons exports totaled $4.05 billion last year, roughly a 10-fold increase from 2015.
The biggest importer of Korean defense systems was Poland, which purchased Korea-made weapons worth about $2.51 billion, more than four times what it bought in 2023. The most-exported items were from Hanwha Aerospace, which shipped 212 units of its K9 self-propelled howitzers, and Hyundai Rotem, selling 134 units of the K2 battle tank.
Middle Eastern countries occupied most of the top five spots among importers of Korean weapons as regional tensions escalated due to the conflicts involving Israel, Hamas, and the Houthis in Yemen.
Saudi Arabia ranked second with $530 million worth of defense imports. The United Arab Emirates and Turkey placed fourth and fifth, respectively, with $145 million and $113 million in purchases of Korean-made weapons. The United States was the third-biggest importer of Korean weapons at $219 million.
Since the Russia-Ukraine war began in 2022, Korean defense firms have made the most of their business opportunities, continuously securing large-scale orders. With backlogs of orders at Hanwha Aerospace, Hyundai Rotem, LIG Nex1 and KAI exceeding 80 trillion won ($5.64 billion), they appear poised to keep the momentum going.
According to defense industry sources, Hanwha Aerospace is expected to soon close a deal with Vietnam to export the K9 self-propelled howitzers, a contract expected to be worth 1 trillion won. Hyundai Rotem is also reportedly nearing the final stage of inking a second agreement with Poland for K2 battle tanks that could be worth over 7 trillion won. LIG Nex1 has supposedly been in talks with Malaysia to export its surface-to-air missile system Cheongung. KAI is looking to export its KF-21 fighter jet to the Middle East.
As the Korean defense companies continue racking up orders and looking to expand their list of clients worldwide, J.P. Morgan released a report on the four major players -- Hanwha Aerospace, Hyundai Rotem, LIG Nex1 and KAI -- last month, increasing their stock price targets by an average of 28 percent while pointing out that there is 'plenty of room to go' for their values to rise.
The report surprised investors, industry officials and analysts as it set the target prices of the four defense companies higher than the domestic market consensus. J.P. Morgan adjusted the target stock prices of Hanwha Aerospace, Hyundai Rotem, LIG Nex1 and KAI to 950,000 won, 90,000 won, 370,000 won and 120,000 won, respectively. As of noon Thursday, about 40 days after the report was released, none of the stocks had hit the projections.
J.P. Morgan noted that it estimates an annual new order market of 19 trillion won -- 14 trillion won from Europe and 5 trillion won from the Middle East -- for Korean land weapons systems companies, adding that it is too early to discuss order peak concerns.
'Korean-made weapons remain one of the top choices for Eastern European countries facing national security issues,' said Lee Tae-hwan, an analyst at Daishin Securities.
'Discussions about ordering conventional weapons will gain momentum. The K9 self-propelled howitzers and K2 tanks are excellent candidates with strong potential for scoring additional export deals in Eastern Europe.'
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