Defense Sector Deep Dive
K-Defense (Korean Defense Industry) has emerged as the most notable rising power in the global defense market. Heightened geopolitical tensions and increasing defense budgets across nations support structural growth.
Key Trends
K-Defense Global Export Boom: Hanwha Aerospace is leaping to become a global defense company through large-scale export contracts for K9 self-propelled howitzers and Redback IFVs. With continuing orders from Poland, Australia, and the Middle East, the order backlog has reached all-time highs. Korea Aerospace Industries (KAI) is also securing growth momentum with FA-50 fighters and KF-21 Boramae programs.
HD Hyundai Heavy Industries' Defense Business: HD Hyundai Heavy Industries holds global competitiveness in naval vessel construction, with defense segment revenue growing rapidly through Korean Navy modernization projects and export expansion.
Global Defense Budget Increases: NATO members and Asian countries are significantly increasing defense budgets due to the Russia-Ukraine war, Middle East instability, and Taiwan Strait tensions. This serves as a structural tailwind for K-Defense exports.
Investment Outlook
The defense sector offers among the best order momentum and earnings visibility. K-Defense's global market share expansion and export diversification are expected to continue, maintaining a bullish outlook.
Risk Factors
Key risks include sudden geopolitical de-escalation (peace agreements), export contract delays, and currency fluctuations.