Korea Defense: What‘s new in Korea defense? From de-rating to differentiation: leaders supported by higher-visibility missile orders

Research evidence excerpt

Korea Defense: What‘s new in Korea defense? From de-rating to differentiation: leaders supported by higher-visibility missile orders

J P M O R G A N Asia Pacific Equity Research

31 July 2026

Korea Defense

What’s new in Korea defense? From de-rating to

differentiation: leaders supported by higher-visibility

missile orders

Korea defense and shipbuilding shares saw a sharp correction this week (Hanwha Korea Defense

ACAerospace -7%, LIG D&A -10%, Hyundai Rotem -16%, KAI -20%, Hanwha Simon Han

Ocean -4%, HD Hyundai Heavy Industries -3% vs. KOSPI -1%). The sell-off was (82-2) 758-5711

largely sentiment-driven after 2Q misses from Hyundai Rotem and KAI raised simon.x.han@jpmorgan.com

concerns around a broader negative read-across to the sector. Hanwha Aerospace’s J.P.BranchMorgan Securities (Far East) Limited, Seoul

strong 2Q26 results—and constructive commentary around near-term Middle East

Jeongsuk Woo

missile orders—suggest the Hyundai Rotem and KAI misses were idiosyncratic, (82-2) 758 5703

rather than indicative of structural weakness across the group. We therefore jeongsuk.woo@jpmorgan.com

reiterate LIG D&A as our top pick in defense, ahead of its 2Q call on 6 Aug. We J.P. Morgan Securities (Far East) Limited, Seoul

Branch

see LIG D&A as offering the clearest combination of (1) order pipeline strength/

visibility and (2) earnings upgrade optionality, supported by imminent missile Karen Li, CFA

(852) 2800-8589

order opportunities across the Middle East and Europe. Our recent downgrades of karen.yy.li@jpmorgan.com

Hyundai Rotem and KAI reinforce this framework. Within defense, our order of J.P. Morgan Securities (Asia Pacific) Limited/ J.P.

preference is LIG D&A (Top Pick) >Hanwha Aerospace, with Hyundai Rotem Morgan Broking (Hong Kong) Limited