K-9 howitzer explosion weighs down Hanwha Techwin

The Korea Times

The Korea Times

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Fri, December 8, 2023 | 06:12

Companies

K-9 howitzer explosion weighs down Hanwha Techwin

Posted : 2017-08-21 17:42

Updated : 2017-08-21 17:59

K-9 self-propelled howitzer

By Lee Hyo-sik

Securities firms are rushing to downgrade their outlook for Hanwha Techwin, following an explosion of a K-9 self-propelled howitzer during an artillery drill last Friday.

The accident, which killed two soldiers and wounded five others, is expected to hurt the firm's corporate image and adversely affect its efforts to export the weapon system.

Eugene Investment & Securities issued a report Monday, saying it was cutting its target price by 11.5 percent to 50,000 won per share from the previous 56,500 won.

"We don't know yet what caused the explosion. We have to wait until investigators find out exactly what happened," analyst Lee Sang-woo said. "There may be something wrong with the K-9 howitzer. Regardless of the findings, the incident will certainly dampen Hanwha's campaign to sell the weapon to foreign countries."

The explosion occurred during an artillery drill at a shooting range in the border town of Cheorwon, Gangwon Province, Aug. 18. Flames erupted from inside one of the 10 K-9 howitzers during a training session.

Hanwha Techwin developed the 155-millimeter howitzer for the nation's armed forces in 1998 to replace K-55 howitzers. The K-9, with a maximum range of 40 kilometers and a maximum travel speed of 67 kilometers per hour, can fire six rounds a minute.

In 2011, the defense arm of Hanwha Group sold 350 K-9 howitzers to Turkey on a technology transfer basis, valued at about $1 billion. In 2014, the firm also signed a deal with Poland to sell 120 K-9s, worth about $310 million. Finland was the third country to purchase Korean-made K-9s and India was fourth.

In recent months, Hanwha has been trying to sign K-9 sales deals with Egypt and several other countries.

Eugene also painted a bleak outlook for Hanwha Techwin for the remainder of the year, projecting its third-quarter performance will fall short of market consensus.

"The company will likely post 1.02 trillion won in sales in the third quarter, up 15 percent from the previous year, but its operating profit will plunge 41.5 percent on rising marketing and other expenses," Lee said. "Its rebound will depend on whether it signs new sales contracts for the K-9 and other weapon systems."

On Monday, Hanwha Techwin stocks fell 5.63 percent, or 2,300 won, to 38,550 won per share from last Friday, while the benchmark KOSPI inched down 3.37 points, or 0.14 percent, to close at 2,355.

A Hanwha official said the company will wait until the Ministry of National Defense concludes its probe into the explosion, declining to elaborate further on the matter.

leehs@ktimes.com