Mass Production Contract for LAH Likely in 2022
The author is an analyst of NH Investment & Securities. He can be reached at jinmyung.choi@nhqv.com. -- Ed.
We expect KAI to enjoy sound growth momentum going forward, thanks to: 1) a turnaround at the aircraft parts business driven by economic re-opening; 2) anticipated LAH mass production orders in 2022; and 3) product lineup expansion to include the KF-21 (2026) and Korean space shuttle (2030).
Business environments turning favorable; turnaround in progress at aircraft parts and weapons export businesses
Economic re-openings amid the easing of Covid-19 should turn business conditions favorable for KAI’s aircraft parts business. In 3Q21, the firm’s aircraft parts sales jumped 41.4% y-y, with overall sales recovering to 72% of the 2018~2019 average.
Expectations for fighter jet exports have also escalated as of late, following: 1) the signing of a T-50 series export contract (to Indonesia); and 2) ongoing negotiations with Senegal and Malaysia on military aircraft exports.
Take-off imminent: Mass production contract for LAH likely in 2022
KAI is to secure the first mass-production orders for LAH in 2022. KAI’s LAHs are to be supplied to the Korean Army from 2023. Related orders are estimated to reach W3.5tn in total over the next seven years.
KAI’s product lineups are to continue expanding going forward. The firm has unveiled a plan to develop an attack helicopter version of the Marineon, and development of the KF-21 is progressing smoothly.
Bright future: The only space shuttle developer in Korea
KAI has the potential for future space shuttle development. Being the only company in Korea capable of developing a space shuttle system, KAI took the initiative in the assembly of a shuttle for the Naro Space Center’s Nuri space rocket development project.
KAI is expected to lead Korea’s next space shuttle R&D project after the transfer of related technologies from the Korean government. The firm is predicted to enter the global space shuttle market from 2030.