Defense - Korea: Time to rerun

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Defense - Korea: Time to rerun

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Defense - Korea

Time to rerun

Industry Overview

Jun’26: Strong exports across munitions/tanks/aircrafts 01 July 2026

South Korea’s 155mm/122mm ammunition export value in Jun’26 increased to $192m Equity

(+19%/+102% YoY/MoM), including 1) $2m/$64m worth of 155mm/122mm ammunition Republic Of Korea

exports to Poland, and 2) $6m worth of 122mm ammunition exports to the UAE. Overall, Defense

exports of munitions/rockets/missiles in 1H26 rose to $1.16bn (+17% YoY), implying an KJ Hwang >>

annualized export value of $2.3bn (+11% YoY). Notable export growth also came from: 1) Research Analyst

tanks and armored vehicles ($490m, +80%/+1,597% YoY/MoM), and 2) aircrafts ($116m, Merrill+82 2 3707Lynch0460(Seoul)

+51%/+896% YoY/MoM). Rocket launcher exports and artillery weapons (including K9 kj.hwang@bofa.com

howitzers) rose to $9m and $17m, respectively, from ‘zero’ in May’26. Dongho Shin >>

Research Analyst

Hanwha Aerospace: Recommencing Polish delivery key Merrilldongho.shin@bofa.comLynch (Seoul)

After a muted delivery growth of Hanwha Aerospace’s high-margin Polish K9/CHUNMOO

in Jan-May’26 (based on Polish Army’s procurement schedule), we see recommencing

Polish K9 shipment in Jun’26 as positive export margin expansion catalyst heading into MCS: Modular charge system

2H26 (>30/>40 units of 2026 K9/CHUNMOO deliveries vs. 44/39 in 2H25). Looking PGM: Precision guided missile

ahead, we see stronger K9/CHUNMOO delivery prospects of >50/>40 and >60/>40 units MSAM: Medium range surface to air

in 2027 and 2028, which should continue to propel export margin expansion on top of 1) missile

rising ammunition/MCS/associate revenue & 2) higher scale efficiency from local LSAM: Long range surface to air

projects in Egypt/Australia. missile