DS Securities: “European defense stocks trend changing, Korean defense stocks also likely to rise”

(Seoul = Yonhap News) Reporter Hwang Cheol-hwan = DS Investment & Securities said on the 19th that the trend in the stock prices of major European defense industry companies has changed and that Korean defense stocks are likely to follow suit and rise.

Researcher Kang Tae-ho said, "Major European defense stocks such as Rheinmetall (+16%), Hensoldt (+15%), Saab (+8%), Leonardo (+8%), and Thales (+7%) showed a rebound in their stock prices from the 12th to the 16th."

He continued, “Korea’s defense industry also showed an upward trend on the 16th, and is expected to enter an upward trend as European defense industry stock prices rebound.”

The background for the strength of European defense stocks is the situation in which Russia and Ukraine resumed mutual air strikes despite U.S. President Donald Trump's announcement of an 'energy ceasefire'.

In relation to this, President Trump strongly criticized Ukraine for attacking Russian oil refineries, and Ukraine said that the sudden speed limit on 'Starshield', the military version of the US Internet service Starlink, had disrupted the conduct of the war, including drone operations against Russia.

Researcher Kang said, "As uncertainty regarding U.S. support for Ukraine has grown, the need to increase Europe's own defense spending has been highlighted. The key point is that it is difficult to end the Russo-U.S. war in the short term, and Europe cannot stop supporting Ukraine."

He emphasized, “Korea ranks second (8.6%) in North Atlantic Treaty Organization (NATO) weapons imports from 2021 to 2025, and has already established itself as a key supplier in Europe.”

With the entry of the K9 wheeled self-propelled howitzer (K9MH,

Researcher Kang said, "At the Warsaw Security Forum held in October, it was emphasized that large-scale ground operations cannot be completed with drones alone, and it was confirmed that the procurement of the latest ground weapons such as tanks and armored vehicles is still important. Therefore, it is expected that the Romanian tank procurement project will accelerate next year, and discussions on the introduction of Chunmu multiple launch rockets in several countries are expected to continue."

In particular, in order to fill the gap caused by the transfer of interception assets in Europe to Ukraine, it was predicted that "discussions on exporting ballistic missile interception systems (Cheongung-II, etc.), anti-drone systems, surveillance and reconnaissance will continue, focusing on Nordic countries."

Researcher Kang suggested Hanwha Aerospace [012450] and LIG Defense & Aerospace as the defense industry's 'Top Pick', and Hanwha Systems [272210] as the next best pick.