Hanwha Aerospace: A Romantic Company Covering Everything from Land, Sea, and Air Weapons to Space

Hanwha Aerospace is my absolute favorite company and the definition of romance itself. I should have bought it when the stock price was around 700,000 to 800,000 KRW per share. Now that it has surged well over 1,000,000 KRW, I can't even dare to buy it. It breaks my heart...

First of all, Hanwha Aerospace is virtually the only company in South Korea that covers the Army, Navy, and Air Force all together. For ground firepower weapons, their flagship products include missiles, self-propelled howitzers, tanks, and rockets. Its subsidiary, Hanwha Systems, and Satrec Initiative are even developing and manufacturing reconnaissance satellites and radars, establishing a complete surveillance system. Another subsidiary, Hanwha Ocean, builds naval ships. They have even expanded into the space market now. It was Hanwha Aerospace that oversaw the production and launch of the recently launched Nuri rocket.

Preparing Against Europe and the Russian Invasion

Hanwha Aerospace's stock price began to skyrocket around the time of the Russia-Ukraine war. Poland and Romania, which border Russia, purchased a massive amount of Hanwha Aerospace's weapons out of concern that they too could become Russia's targets at any moment. Korea heavily exported the K-9 tank self-propelled howitzer (the main equipment of the South Korean artillery), the Chunmoo multiple rocket launcher (responsible for precision strikes), and the Redback armored vehicle (which transports soldiers to the battlefield) to these countries. The K-9 self-propelled howitzer and the Chunmoo rocket are the weapons being exported in particularly large quantities.

Now, moving beyond Eastern Europe, exports are just around the corner for Western Europe, including Spain and France, and Northern Europe, like Norway. Why is that? Why else? As I mentioned in my previous post, European countries are already significantly increasing their defense budgets based on the premise of a Russian reinvasion. Hanwha Aerospace has even established local production bases in Romania, Poland, Saudi Arabia, Australia, and the United States to engage in direct sales.

Let's look at the data for the first quarter of this year. The performance reflected in Q1 includes the K-9 for Egypt, K-9 and Chunmoo for Poland, Redback for Australia, K-9 for Romania and India, K-9 tank for Poland, guided weapons for the Middle East, M-SAM launchers for Iraq, and Chunmoo for Estonia, Poland, and Norway.

How was last year's annual performance? Total revenue was 26.7029 trillion KRW, more than doubling compared to 2024. Out of this, Land Defense accounted for 8.1331 trillion KRW, Aerospace for 2.0206 trillion KRW, subsidiary Hanwha Systems for 3.6641 trillion KRW, and Hanwha Ocean for 12.7835 trillion KRW. The revenue forecast for this year is 34.3979 trillion KRW, and for next year, it is 36.7231 trillion KRW. It just keeps growing endlessly. This is proof that the global market truly wants Hanwha Aerospace's weapons.

This represents Hanwha Aerospace's 2025 revenue and operating profit. Land Defense makes up most of it.

The U.S. with a Declined Shipbuilding Industry, Hanwha Ocean is the Biggest Beneficiary

This time, shall we look at the subsidiary, Hanwha Ocean? Hanwha Ocean is a shipbuilding company, meaning it basically makes and exports ships. They mainly manufacture commercial ships, special vessels, offshore plants, and engines. Commercial ships include LNG carriers, Very Large Gas Carriers (VLGC), Very Large Crude Carriers (VLCC), and container ships. Offshore plants consist of Floating Liquefied Natural Gas (FLNG) facilities, Floating Production Storage and Offloading (FPSO) units, and Floating Production Units (FPU).

And special vessels are the naval ships related to defense. There are submarines, surface ships, combat ships, and auxiliary ships. Last year's revenue was 7.8393 trillion KRW for commercial ships, 9152 billion KRW for special vessels, and 6224 billion KRW for offshore. Commercial ships are overwhelming, but we'll dissect that in detail later if I ever need to write about the shipbuilding sector. Since this is about defense, let's only look at special vessels.

Hanwha Ocean is considered the biggest beneficiary of the Korea-U.S. Shipbuilding Cooperation Project (MASGA). In last year's October summit, President Trump accepted President Lee Jae-myung's request to allow the supply of fuel for nuclear-powered submarines. And at that time, he specifically pointed out Hanwha Ocean's Philadelphia Shipyard as the place to build the submarines.

Why does the United States, the world's superpower, not build ships directly and instead ask a South Korean company? It's because the U.S. itself stopped providing subsidies to its shipbuilding industry starting in 1981, after the Cold War, causing its supply chain to decline for over 30 years. The average annual construction of naval ships plummeted from about 16.3 ships in 1982-1991 to just about 5-6 ships in 1992-2011. That's why they have been injecting a budget since 2012 to restore it back to an annual average of 10.9 ships.

But an infrastructure collapse accumulated over a long period doesn't just get fixed overnight. This is why domestic shipbuilders that build and maintain naval ships, especially Hanwha Ocean, are benefiting. Moreover, not only the U.S. but Canada is also highly likely to become a customer. In January and February of this year, Canada's Special Minister for Defence Procurement and Ontario's Ministers of Economic Development visited Hanwha Ocean's Geoje shipyard. I look forward to hearing good news.

The Earth is Too Small

Lastly, space. How did Hanwha Aerospace end up expanding into the space business? Basically, the technology for missiles is not much different from that of spacecraft. If you put a satellite on a rocket, it becomes a spacecraft; if you load a warhead, it becomes a missile; and if you load a nuclear warhead, it becomes a nuclear missile. An ICBM, which we call an Intercontinental Ballistic Missile, is a weapon that flies all the way into outer space and then plunges back down to the ground. The only difference is that a spacecraft places a satellite into outer space and falls into the ocean.

The Nuri rocket, whose production and launch were overseen by Hanwha Aerospace this time, also performed the mission of carrying satellites developed by South Korean universities and companies into Earth's orbit. Hanwha Aerospace receives launch fees in exchange for sending these satellites. A business that could only be done by countries with advanced space technology like India, the U.S., and Russia is now possible for our country as well.

Personally, I see this as meaning they will expand their business into space—a future growth engine—since they have a stable source of income from weapons. Hanwha Aerospace's corporate philosophy itself is: "We pioneer the future with new technologies and continue to take on endless challenges to create sustainable value for tomorrow." Isn't that romance just killer?

This space business is not a money-maker just yet. While its revenue reaches 2.5260 trillion KRW, its operating profit is a mere 12.8 billion KRW. For comparison, the operating profit for Land Defense is 2 trillion KRW, Hanwha Systems is 119.9 billion KRW, and Hanwha Ocean is 1.1676 trillion KRW. Even so, doesn't the very fact that they are pioneering the future make your heart race????

Securities analysts have now begun to compare Hanwha Aerospace with global companies rather than Korean ones. These include Boeing, Lockheed Martin, and General Dynamics of the U.S., BAE Systems of the UK, Rheinmetall of Germany, and Saab of Sweden. Of course, there is still a massive gap in corporate size and market capitalization.

Well, who knew SpaceX would do as well as it is doing now? It wasn't that long ago when Jeff Bezos was giving Elon Musk a hard time. There's no law saying Hanwha Aerospace can't surpass global defense giants. I think the very fact that we have such a company in South Korea is a blessing.