Hanwha Systems: Q2 2026 revenue up 45.5%, EBITDA margin 13.3% – best quarter in two years, but debt keeps rising

25 августа Hanwha Systems раскрыла результаты за второй квартал 2026 года: выручка выросла на 45,5% год к году до 1 117,6 млрд вон, EBITDA – на 150,0% до 148,9 млрд, чистая прибыль – на 65,5% до 67,1 млрд. Квартал сильный, но за ним стоит рост долга до 1 669,5 млрд вон, и при текущей оценке акции выглядят скорее привлекательно, чем безусловно дёшево.

Key takeaways

— Q2 2026 revenue accelerated to +45.5% – best pace in four quarters

— EBITDA margin of 13.3% – a two-year high, operating profit tripled

— Net profit up 65.5%, but Q1 2026 was a loss – annual dynamics uneven

— Debt rose to KRW 1,669.5 bn, net debt/EBITDA at 3.22

— Operating cash flow of KRW 152.3 bn in the quarter, but capex consumes half

— Dividend yield of 0.7% – below historical, payments questionable due to debt

— Valuation: EV/EBITDA 40.5 vs 3-year average 21.5 – shares more expensive than their own history

Attractiveness

Key figures, KRW bn

Q2 2026 revenue accelerated to +45.5% – best pace in four quarters

In Q2 2026, Hanwha Systems' revenue reached KRW 1,117.6 bn, up 45.5% year-on-year. This is the fastest growth in the last four quarters: Q1 2026 grew 17.0%, Q4 2025 grew 49.9%, but that quarter was exceptional due to one-off deliveries. Excluding Q4 2025, the current quarter is the best in two years.

The acceleration came amid recovering demand in the defense sector and rising export orders. The company does not disclose segment revenue in its quarterly report, but the dynamics point to growth concentrated in weapons systems and aerospace electronics. The question is how sustainable this pace is: previous quarters showed volatility from +11.8% to +49.9%.

EBITDA margin of 13.3% – a two-year high, operating profit tripled

EBITDA in Q2 2026 reached KRW 148.9 bn, up 150.0% year-on-year. EBITDA margin was 13.3% versus 7.8% in Q2 2025 – the best in two years. Operating profit rose from KRW 32.5 bn to KRW 103.7 bn, more than tripling.

The margin expansion came from operating leverage: with revenue up 45.5%, operating expenses grew slower, especially SG&A. The company also benefited from a better order mix – more high-margin contracts in the aerospace segment. However, such a margin level may be unsustainable: in previous quarters it ranged from 5.8% to 9.7%.

Net profit up 65.5%, but Q1 2026 was a loss – annual dynamics uneven

Net profit for Q2 2026 was KRW 67.1 bn, up 65.5% year-on-year. However, quarterly profit dynamics are highly volatile: Q1 2026 saw a loss of KRW 54.9 bn, while Q3 2025 profit reached KRW 151.7 bn. Such swings are related to one-off items – revenue recognition on large contracts and currency revaluations.

Trailing twelve-month net profit was KRW 175.6 bn – notably below the peaks of 2024, when Q4 alone earned KRW 364.8 bn. Investors should focus on average profit over several quarters rather than individual spikes. Net margin in Q2 2026 was 6.0% versus 5.3% a year earlier.

Debt rose to KRW 1,669.5 bn, net debt/EBITDA at 3.22

Net debt at the end of Q2 2026 stood at KRW 1,669.5 bn, up KRW 309.1 bn from the previous reporting date and KRW 1,485.6 bn over the last 12 months. Net debt to EBITDA for the trailing twelve months is 3.22 – a high level for a defense company, though it reflects accumulation of funds to finance large projects.

Debt growth comes amid an active investment program: capex in Q2 was KRW 74.0 bn, and about KRW 325 bn over the last 12 months. The company is also building working capital for growing orders. While operating cash flow is positive – KRW 152.3 bn in the quarter – debt burden remains a key risk, especially if revenue growth slows.

Operating cash flow of KRW 152.3 bn in the quarter, but capex consumes half

In Q2 2026, operating cash flow was KRW 152.3 bn – the second consecutive positive quarter after a slump in Q3 2025 when OCF was minus KRW 212.7 bn. Capex for the quarter was KRW 74.0 bn, leaving free cash flow before debt payments of about KRW 78 bn.

However, over the last 12 months, operating cash flow was only KRW 78.7 bn – extremely low for a company with revenue above KRW 4 trillion. The reason is volatility: in some quarters OCF was deeply negative due to rising receivables and advances on contracts. The company finances investments through debt, explaining the rise in net debt.

Dividend yield of 0.7% – below historical, payments questionable due to debt

Over the last 12 months, Hanwha Systems paid dividends corresponding to a yield of 0.7% at the current price. This is low for the South Korean market, where average dividend yields are higher. The company pays dividends irregularly and has no formal dividend policy with a fixed payout ratio.

Given the current debt level – 3.22 net debt/EBITDA – and the need for capex on defense projects, the likelihood of increasing dividends in the coming years is low. The company is more likely to direct free funds to debt repayment. For income-oriented investors, this stock is not of interest.

Valuation: EV/EBITDA 40.5 vs 3-year average 21.5 – shares more expensive than their own history

The current EV/EBITDA multiple is 40.5 – almost double the three-year average (21.5). P/E for the trailing twelve months is 75.7 – also indicating a high valuation. The company's market capitalization is KRW 13,295.2 bn, implying significant growth expectations.

According to the portal's model, the upside to fair value is +21% – meaning the market has already priced in significant EBITDA growth, but the model still sees potential. However, if revenue growth slows below 20% and margins return to the average 7-8%, the current valuation would look stretched. The key question is whether the company can sustain a 13% margin.

Valuation on the latest reported figures

Bottom line

Q2 2026 was strong: revenue grew 45.5%, EBITDA margin reached 13.3% – the best in two years, and operating profit tripled. However, this growth came with debt rising to KRW 1,669.5 bn, and free cash flow remains weak – OCF over 12 months was only KRW 78.7 bn. At an EV/EBITDA of 40.5 versus the 3-year average of 21.5, the shares look expensive, although the portal's model gives +21% upside. Verdict – rather attractive: the strong quarter and defense backlog justify a premium, but only if the company sustains margins and starts generating consistent cash flow.