[Alpha Biz= Paul Lee] Seoul, October 14 — LS Securities projected that Korea Aerospace Industries (KAI) will report third-quarter earnings below market expectations, citing domestic aircraft delivery delays. However, the brokerage raised its target price from ₩118,000 to ₩124,000, maintaining a “Buy” recommendation, citing sustained structural growth in the aerospace industry.


According to LS Securities, KAI’s Q3 consolidated revenue is expected to reach ₩1 trillion, up 12% year-on-year, while operating profit is forecast to fall 32.5% to ₩52 billion.


Analyst Choi Jung-hwan noted, “Revenue will likely meet consensus, but operating profit will miss due to delays in domestic aircraft deliveries. However, total annual delivery volumes should remain unchanged.”


He added, “Most of the domestic business this quarter consists of R&D-related revenue, including KF-21 fighter jet development, which carries lower margins. Still, KAI is expected to recover profitability in the fourth quarter as delayed shipments are recognized and mass production resumes.”


On exports, LS expects FA-50 deliveries to Poland and Malaysia to remain the main contributors to overseas sales. While “some risk exists regarding delays in Poland’s FA-50PL deliveries,” Choi said, “Other FA-50 export programs, including Malaysia, remain on track.”


Despite near-term profit weakness, LS Securities reaffirmed its bullish stance:


“Even with weaker quarterly results, the long-term growth trajectory is clear,” Choi said. “Recent defense project approvals — including KF-21’s integration of air-to-ground and long-range air-to-air guided weapons — will enhance export competitiveness.”


He concluded, “Regardless of geopolitical fluctuations, Korea’s aerospace sector has entered a structural growth phase, and KAI stands as the primary beneficiary of this long-term uptrend.”

 

 

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