Analysts are raising their earnings outlook for Hanwha Techwin Co., a defense and aircraft engine parts unit of South Korean conglomerate Hanwha Group, on prospective deals to ship its K-9 self-propelled howitzers late this year.

According to market estimates polled by FnGuide on Tuesday, Hanwha Techwin is expected to report 68.4 billion won ($60 million) in operating profit over revenue of 1.406 trillion won. The figures are up 124.3 percent and 20.3 percent, respectively from a year ago. The operating profit in the third quarter is expected to fall 35.7 percent to 28.3 billion won from a year earlier but to rebound from the fourth quarter, analysts said.

“The company is expected to ink a K-9 self-propelled howitzer deal in the fourth quarter,” said Jung Dong-ik, an analyst at KB Securities Co. “Additional deals with Estonia and Norway may be closed within this year.”

A 1 trillion won deal to export the weaponry to Egypt may be signed next year, raising market expectations that the Korean company would get on track for stable growth. Hanwha Techwin is forecasted to report 131 billion won in operating profit this year, 13.1 percent down from a year ago, but its operating profit will turn around next year, reaching 174 billion won, according to market estimates.

Hanwha Techwin’s stock price is also expected to be bullish on a strong outlook for Hanwha Group’s reorganization with a focus on defense business.

“Various measures such as divestiture of money-losing businesses and initial public offering of subsidiaries can be reviewed next year to enhance the company. It these can be realized, the stock price will go up,” Jung said.

Hanwha Techwin wholly owns Hanwha Systems, Hanwha Land Systems, Hanwha Power Systems and Hanwha Precision Machinery. Hanwha Techwin also fully controls Hanwha Defense Systems via Hanwha Precision Machinery. These unlisted companies would help create synergy with positive earnings and IPO.

Hanwha Techwin shares closed 0.59 percent up at 34,350 won on Wednesday.

By Yoon Jin-ho

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