Korea Aerospace Industries (047810 KS) (Buy) - Long-term growth potential remains solid

研报英文原文证据摘录

Korea Aerospace Industries (047810 KS) (Buy) - Long-term growth potential remains solid

Global Markets Research

Korea Aerospace Industries 047810.KS 047810 KS 10 June 2026

EQUITY: CAPITAL GOODS

Rating Remains BuyLong-term growth potential remains solid

Target price

Reduced fromMaintain Buy and lower TP by 10.5% to KRW170,000 KRW 170,000 KRW 190,000

Maintain Buy and lower TP to KRW170,000 (down 10.5%), implying 23.5% upside Closing10 June price2026 KRW 137,600

We reaffirm Buy and lower our TP to KRW170,000 (from KRW190,000) for Korea Aerospace

Industries (KAI). Our TP is based on an unchanged target P/E of 37.1x applied to our 2027F EPS Implied upside +23.5%

estimate of KRW4,622 (previously KRW5,167, which was arrived at after discounting 2028F EPS of

KRW6,101 for two years by a CoE of 8.3%). Our target P/E is the peak 12MF P/E over 2014-15, Market Cap (USD mn) 8,787.2

during which KAI’s earnings and new orders were on an uptrend. The stock currently trades at a ADT (USD mn) 83.1

2026F P/E of 63.0x (EPS: KRW2,183).

Relative performance chart

KAI share has corrected 31.8% from its peak price due to: 1) retreat from the UJTS (Undergraduate

Jet Training System) program, 2) retail investors focusing more on the semi sector, 3) concerns

about the Middle-East ceasefire, and 4) sentiment correction after Hanwha Aerospace (012450 KS,

Buy) increased its stake in KAI. We believe KAI is unlikely to be put on sale under the current tenure

of the government.

In our view, KAI’s long-term growth remains solid driven by the KF-21 aircraft. We see further

expansion opportunities for KAI as KF-21 is likely to capture demand from: 1) F-16 (A/B and C/D)

replacements, 2) countries with limited defense budgets, and 3) fifth-generation fighters. We believe