Corporate Logo(source: hyundai-rotem.co.kr)
Meritz Securities stated that Hyundai Rotem (064350)'s confirmation of a second K2 tank export contract with Poland enhances the company’s valuation appeal.
In a report released on July 3, analyst Lee Ji-ho of Meritz Securities noted, “Hyundai Rotem has recorded a 308% increase in its stock price year-to-date, the highest among domestic defense stocks.” Despite this significant rally, the stock still presents strong valuation merits within the defense sector, he added.
Lee further commented, “While news of this large-scale second K2 tank export deal may prompt some investors to take profits, the significance of the agreement extends beyond a one-time event. It is aligned with the European Union’s rearmament plans (announced in March) and increased defense spending by NATO member states. This positions the company for enhanced global expansion in the long term.”
The latest contract includes 180 K2 tanks—matching the quantity in the initial deal—but is valued at approximately 6.7 billion dollars (around 9 trillion won), marking the largest individual export agreement in the company's history. The deal also includes about 80 tanks from the K1 series. Of the 180 K2 tanks, 63 are scheduled to be manufactured locally in Poland. Accordingly, while the deal includes the cost of establishing local production facilities, the average selling price (ASP) per unit did not rise significantly relative to the contract size.
Lee added, “Due to the recent sharp rally in domestic defense stocks, the average price-to-earnings ratio (PER) in Korea has now surpassed that of Europe for the first time—38.7x compared to 34.4x.” In this environment, he emphasized that investors should focus on stocks like Hyundai Rotem, which still offer strong valuation fundamentals.
*[KOSPI] Hyundai Rotem(064350) is a manufacturer of railway vehicles and defense products, conducting rail solutions, defense solutions, and eco-plant businesses. Market capitalization is 22.156 trillion won (as of July 2, 2025, closing price).
Corporate Logo(source: hyundai-rotem.co.kr)
Meritz Securities stated that Hyundai Rotem (064350)'s confirmation of a second K2 tank export contract with Poland enhances the company’s valuation appeal.
In a report released on July 3, analyst Lee Ji-ho of Meritz Securities noted, “Hyundai Rotem has recorded a 308% increase in its stock price year-to-date, the highest among domestic defense stocks.” Despite this significant rally, the stock still presents strong valuation merits within the defense sector, he added.
Lee further commented, “While news of this large-scale second K2 tank export deal may prompt some investors to take profits, the significance of the agreement extends beyond a one-time event. It is aligned with the European Union’s rearmament plans (announced in March) and increased defense spending by NATO member states. This positions the company for enhanced global expansion in the long term.”
The latest contract includes 180 K2 tanks—matching the quantity in the initial deal—but is valued at approximately 6.7 billion dollars (around 9 trillion won), marking the largest individual export agreement in the company's history. The deal also includes about 80 tanks from the K1 series. Of the 180 K2 tanks, 63 are scheduled to be manufactured locally in Poland. Accordingly, while the deal includes the cost of establishing local production facilities, the average selling price (ASP) per unit did not rise significantly relative to the contract size.
Lee added, “Due to the recent sharp rally in domestic defense stocks, the average price-to-earnings ratio (PER) in Korea has now surpassed that of Europe for the first time—38.7x compared to 34.4x.” In this environment, he emphasized that investors should focus on stocks like Hyundai Rotem, which still offer strong valuation fundamentals.
*[KOSPI] Hyundai Rotem(064350) is a manufacturer of railway vehicles and defense products, conducting rail solutions, defense solutions, and eco-plant businesses. Market capitalization is 22.156 trillion won (as of July 2, 2025, closing price).