J.P. Morgan South Korea FTM 19 May 26 Korea Defense; Hyundai E&C and More

Research evidence excerpt

J.P. Morgan South Korea FTM 19 May 26 Korea Defense; Hyundai E&C and More

Asia Pacific Equity Research

South Korea First to Market 19 May 2026

Top Stories

Korea Defense (Simon Han)

April defense export data clearly shows upside risk to Hanwha Aerospace’s 2026 Poland Chunmoo

delivery guidance - 36 units shipped in just 4 months

Korea defense exports grew 13% y-y and 14% m-m in April to $1.2B, continuing to break record-highs, driven mainly by robust

rocket launcher systems and aircraft & aerospace shipments. Our key takeaways from the April export data are: (1) Hanwha

Aerospace shipped an additional 18 units of Chunmoo MLRS to Poland, bringing YTD deliveries to 36 units (18 units in

February ); we see upside risk to the company’s full-year delivery guidance of 40+ units; (2) Korea exported $80M worth of

aircraft & components to Indonesia in April (following $80M shipments in January), which we believe is a positive signal

regarding KAI’s Indonesia KF-21 order discussions . We expect the Korea defense export momentum to continue

throughout the coming months on the back of secured orders and maintain our positive view on all Korea defense coverage

names, with Hanwha Aerospace as our top pick. We also highlight our positive view on LIG D&A in the short term (next 3

months) with M-SAM II export to ME on the verge.

Hyundai E&C (Sonny Lee) (000720 KS, OW)

Shares down 7% on a construction defect issue; recommend buying on the dip

Hyundai E&C (HDEC) shares fell 7% on reports of construction defects at the Samseong Station section of GTX Line A. HDEC

stated it first identified and reported the issue in November 2025 and has proposed reinforcement work. We estimate a worst-

case OP impact of ~W23bn if liquidated damages are imposed for delays.