Hyundai Rotem makes money from defense (defense solutions), led by K2 tanks and armored vehicles and exports to Poland; rail (rail solutions), covering KTX high-speed trains and metro cars; and eco-plant work such as steel-making equipment and hydrogen refueling. Because the higher-margin defense business carries greater weight, overall profitability improves as its share grows. Along with record Q1 results, a string of single-sale and supply-contract disclosures pushed the order backlog toward ₩30 trillion, while risk disclosures such as a lawsuit filing and a clarification of market rumors coexisted. The recent picture is two-sided: the strengths are structurally higher defense earnings, an order backlog near ₩30 trillion, and a combination of a 25% ROE with a peer-lowest multiple, while the cautions are the low margins of the non-defense segments, a high debt ratio, and the sensitivity of results to the execution of export contracts, exchange rates, and geopolitics.
At-a-glance assessment financial health · growth · profitability · valuation
- Debt is somewhat higher than equity (debt ratio 203.9%).
- Revenue rose 33.4% year over year, and the pace is quickening (3-year trend: rising).
- Most recent quarter (Q1 2026) revenue was 23.9% higher than a year earlier.
- ROE is 25.0% (controlling-interest basis). It is above the sector average.
- Operating margin is 17.2%.
- The forward P/E sits below the sector median.
Ownership & governance As of 2025-12-31
Largest shareholder Hyundai Motor 33.77% (individual)
Controlling bloc incl. related parties 33.77%
With the controlling bloc holding 34%, the ownership structure is stable.
🔎 In-depth analysis
- Hyundai Rotem makes money in three broad ways.
- The first, more than half of revenue, is defense solutions, centered on K2 tanks and wheeled armored vehicles, with K2 export volumes to Poland lifting results.
- The second, about a third of revenue, is rail solutions (rail), covering KTX and urban-rail cars along with signaling and maintenance.
- The third, about a tenth of the total, is eco-plant (steel-making equipment, smart factories, and hydrogen-refueling equipment).
- For the same revenue, defense carries a much higher margin than rail or plant, so overall profitability improves as the defense share grows.
- The recent closing price is ₩160,600 and the market cap is ₩17.5 trillion.
- The price sits below its 20-day moving average (₩194,415) and below its 60-day average (₩208,403).
- Trading below both its short- and medium-term moving averages, the trend is on the soft side.
- The RSI (a supporting gauge that scores the strength of gains versus losses over the past 14 days on a 0-100 scale) is 36.6, a neutral level.
- The one-month change is -15.2%, the three-month change is -23.9%, and the position relative to the 52-week high is -40.3%.
- Relative strength versus KOSPI is 11 (on a 1-99 scale that weights recent returns against the index over the past year more heavily; higher means stronger than the market).
- That places it near the top 90% of all stocks by strength.
- Over the past three months it lagged the index by 37.4%.
- It is best to read the chart alongside trading volume and the dates of disclosures.
- Profitability stands out.
- ROE (how much is earned in a year on equity) is 25.0%, the highest among defense peers, and the operating margin is 17.2%.
- That said, the debt ratio (debt relative to equity) is somewhat high at 203.9%, partly stemming from the sector structure in which advance payments and construction- and delivery-related liabilities loom large in defense and plant work.
- With an interest coverage ratio of 17.5x, covering interest is no strain.
- The P/E (how many times a year's earnings the price is worth) is 22.77x, but because this is based on the most recent annual results, it has the limitation of looking somewhat high in the current phase of rapidly rising earnings.
- On a basis that reflects this year's earnings, the multiple falls further.
- Growth is fast.
- In 2025, revenue rose 33.4% from the prior year, operating profit jumped about 2.2x (+120%), and net profit rose about 1.9x (+89%).
- Over the past five years operating profit climbed step by step: ₩80.2 billion → ₩147.5 billion → ₩210.0 billion → ₩456.6 billion → ₩1.0056 trillion.
- In Q1 2026 the growth continued, with revenue of ₩1.4575 trillion (+23.9% year on year), operating profit of ₩224.2 billion, and net profit of ₩202.7 billion (+29.0%).
- This year is one in which K2 deliveries to Poland ramp up in earnest and the defense share grows further, so full-year profit is set to finish higher than simply multiplying Q1 by four would suggest.
- This year's net profit looks set to step up to around ₩940 billion from last year's ₩769.9 billion, and the share multiple that reflects this falls below the prior-year annual basis.
- Along with record Q1 results, a string of single-sale and supply-contract disclosures this year pushed the order backlog toward ₩30 trillion.
- At the same time, there were disclosures of a lawsuit and other filings, a decision to acquire shares of another company, and a clarification of rumors and reports, so this is a period in which business expansion coexists with dispute and risk factors.
- The repeated disclosures of IR events show that the company is communicating actively with investors.
- The strengths are clear.
- Defense earnings have structurally stepped up, an order backlog near ₩30 trillion secures several years of revenue visibility, and the combination of a 25% ROE with a peer-lowest P/E is uncommon.
- On this year's earnings, the multiple is markedly lower than domestic defense peers such as Hanwha Aerospace, Hanwha Systems, and LIG Defense and Aerospace, reading as an undervaluation signal.
- The points to note are that the rail and eco-plant segments carry margins far below defense, so company-wide profitability hinges on the defense delivery schedule; that the debt ratio is high; and that results are sensitive to the execution and financing terms of export contracts such as Poland's, plus exchange rates and geopolitics.
- In sum, it is a stock that is strong as defense deliveries proceed on plan and the order pipeline is further realized, and weaker if non-defense weakness or export-schedule slippage overlap.
🔎 Valuation vs peers Undervalued
A comparison of earnings and profitability against domestic listed defense majors (tanks and armored vehicles, aerospace, systems, missiles).
| Peer | P/E | P/B | ROE |
|---|---|---|---|
| Hanwha Aerospace | 34.98x | 5.07x | 14.51% |
| Hanwha Systems | 50.46x | 2.52x | 5.00% |
| LIG Defense & Aerospace | 60.26x | 10.68x | 17.72% |
Among domestic defense peers (Hanwha Aerospace at a P/E of 37.1, Hanwha Systems at 57.4, LIG Defense and Aerospace at 63.8), Hyundai Rotem's P/E of 24.1x is the lowest, while its ROE of 25.0% is the highest. The prior-year P/E may not look low in absolute terms, but because earnings are inflecting steeply, the multiple on last year's results has its limits; on a basis that reflects this year's earnings the multiple falls further, widening the discount to peers. Considering capital efficiency and order visibility together, we judge it undervalued relative to the peer set.
Price history Close · MA20 · MA60
The latest close is ₩160,600 and the market capitalization is ₩17.5 trillion. The price sits below its 20-day moving average (₩194,415) and below its 60-day moving average (₩208,403). It is under both its short- and medium-term moving averages, so the trend looks subdued. The RSI (a supplementary indicator that gauges the strength of gains versus losses over the past 14 days on a 0-100 scale) is 36.6, a neutral level. The one-month change is -15.2%, the three-month change is -23.9%, and the position relative to the 52-week high is -40.3%. Relative strength versus the KOSPI is 11 (on a 1-99 scale, converted from returns against the index over the past year with more weight on recent performance; higher means stronger than the market). It is stronger than roughly 10% of all stocks. Over the past three months it lagged the index by 37.4%. Chart interpretation is best done alongside trading volume and the dates on which disclosures occur.
Relative performance stock vs index · start = 100
Excess return vs index · 3M -37.37% / 6M -51.73% / 12M -65.00%
Key metrics vs sector median
Valuation
The P/E of 22.77x is below the sector median (50.46x). The P/B is 5.69x.
Enterprise value (EV)
EV = market cap + net debt. It reflects cash and debt, so it captures the real cost of the whole business that market cap alone misses; lower multiples are cheaper relative to earnings or sales.
Intrinsic value (DCF estimate)
DCF (discounted cash flow) estimate — discount rate 9.2%, initial growth 10.0%→terminal 2.0%, 10-yr forecast, free-cash-flow basis, forward earnings power normalized 1.725x. A reference range that shifts materially with assumptions.
Profitability & financials
Return on equity (ROE) is 25.0%, above the sector average (15.0%). The operating margin is 17.2%. The debt ratio is 203.9%, so the financial structure is somewhat high.
Growth FY2025 · annual report (consolidated)
| Item | 2023 | 2024 | 2025 | YoY |
|---|---|---|---|---|
| Revenue | $2.4B | $2.9B | $3.9B | +33.41% ↑ faster |
| Operating profit | $139.2M | $302.6M | $666.5M | +120.26% ↑ faster |
| Net profit | $106.7M | $269.7M | $510.3M | +89.23% ↓ slower |
| 5-year | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Revenue | $1.9B | $2.1B | $2.4B | $2.9B | $3.9B |
| Operating profit | $53.2M | $97.8M | $139.2M | $302.6M | $666.5M |
| Net profit | $44.1M | $131.1M | $106.7M | $269.7M | $510.3M |
| Revenue CAGR | 4-yr avg 19.40% | ||||
Revenue rose 33.4% year over year (2023 ₩3.6 trillion → 2024 ₩4.4 trillion → 2025 ₩5.8 trillion), and the three-year trend is 'rising'. The pace of growth also quickened from the prior year. Operating profit rose 120.3% year over year. Profit is growing at an accelerating pace. Over the 5 years on record, revenue compound annual growth (CAGR) is 19.4%. The two-year revenue CAGR is 27.6%. In the most recent quarter (Q1 2026), revenue was 23.9% higher than the same period a year earlier.
Latest quarterly results Q1 2026 · vs year-ago
Technical indicators
What stands out
- P/E and P/B are both low versus peers, so the price looks inexpensive relative to earnings and assets.
- ROE of 25.0% points to solid profitability.
- Revenue grew 33.4% year over year, a sign of growth.
Points to watch
- The figures shown are based on the last annual report as of the writing date, so it is best to review the latest quarterly results and filings alongside them.
Recent news & events searched · sourced
- 2026-05-28UpdateSingle-sale and supply-contract disclosure (correction) — expanding the order backlog through new ordersStrengthens medium-term revenue visibility. Defense and rail delivery volumes will feed into results in sequence. Source
- 2026-05-21FilingDecision to acquire shares and investment securities of another company (correction) — expanding business linkage through a stake acquisitionA signal of medium-term business-portfolio expansion. The scale of investment and linkage effects require follow-up confirmation. Source
- 2026-05-15EarningsQ1 2026 quarterly report — revenue of ₩1.4575 trillion, operating profit of ₩224.2 billion, net profit of ₩202.7 billion (net profit +29.0% year on year)Confirms strong near-term results. Continued growth on a joint upswing in defense and rail. Source
- 2026-05-07UpdateDisclosure of a lawsuit filing (a claim above a set amount) (correction) — a dispute-related risk factorDepending on the outcome, possible one-off costs or reputational impact. Progress needs monitoring. Source
- 2026-04-29UpdateSingle-sale and supply-contract disclosure (correction) — expanding the order base with an additional supply contractA medium-term revenue contribution. Part of the trend of the cumulative order backlog expanding toward the ₩30 trillion level. Source
Figure cross-check computed ↔ external
| Metric | Computed | External | Status | Source |
|---|---|---|---|---|
| Q1 2026 revenue / operating profit / net profit | revenue 1₩457.5 billion · operating profit ₩224.2 billion · net profit ₩202.7 billion | revenue 1₩457.5 billion · operating profit ₩224.2 billion | Confirmed | link |
| 2025 annual operating profit | 1₩5.6 billion(operating margin 17.2%) | 1₩5.6 billion | Confirmed | link |
| Estimated 2026 net profit (internal estimate) | approx. ₩940.0 billion | — | Unverified | link |
Recent filings
- 2026-05-29Large-business-group status disclosure
- 2026-05-28Single supply/sales contract (amended)
- 2026-05-28Corporate governance report
- 2026-05-21Amended filing
- 2026-05-15PeriodicQuarterly report
- 2026-05-15Disclosure
- 2026-05-15Disclosure
- 2026-05-08Disclosure
- 2026-05-07Litigation disclosure (amended)
- 2026-04-29Single supply/sales contract (amended)
- 2026-04-27Single supply/sales contract (amended)
- 2026-04-27Disclosure
📖 Plain-language glossary — expand if you are new to this
- P/E
- How many times a year's net profit the price is worth (lower is cheaper relative to earnings). The P/E here is on trailing (last full-year) results; for companies whose earnings swing fast (memory chips and other cyclicals/high-growth), a forward P/E on this year's expected earnings is more accurate.
- P/B
- Price relative to net assets (equity). Around 1x means it trades near book value; below 1x means below book.
- P/S
- Price relative to a year's revenue — useful for growth companies with thin earnings.
- Net debt / EV
- Net debt = interest-bearing debt − cash. Negative means more cash than debt (net cash). EV (enterprise value) = market cap + net debt, closer to what it would cost to buy the whole business.
- EV/EBIT · EV/EBITDA · EV/Sales
- Enterprise value against operating profit (EBIT), EBITDA, or revenue. Unlike P/E these reflect debt and cash; lower is cheaper relative to earnings power or sales.
- FCF / FCF yield
- Free cash flow = operating cash − capex, the cash actually left over. FCF yield = FCF ÷ market cap; higher means more cash generated per unit of market value.
- Intrinsic value (DCF)
- Future free cash flow (or, for some capex-heavy but profitable names, forecast earnings) discounted to today to estimate per-share value. Because it shifts a lot with the discount-rate and growth assumptions, it is shown as a bear/base/bull range, and the basis and assumptions are disclosed in one line beneath it.
- ROE
- How much profit the company earns in a year on its equity (%). Higher means better returns on capital.
- EPS / BPS
- Earnings per share / net assets (book value) per share.
- Operating / net margin
- Profit left from the core business / final profit after tax and interest, per unit of revenue.
- Debt ratio
- Debt relative to equity (%). Higher means more reliance on borrowing (norms vary by sector).
- Current ratio
- Assets convertible to cash within a year against debt due within a year. Above 100% leaves some short-term headroom.
- Interest coverage
- How many times operating profit covers the interest owed. Below 1x means operating profit alone struggles to cover interest.
- Dividend yield / payout ratio
- The year's dividend as a % of today's price / the share of earnings paid out as dividends.
- Revenue CAGR
- Multi-year growth expressed as a single yearly average (compound annual growth rate).
- RSI (short-term signal)
- Whether recent price action is overheated or beaten down. Above 70 is overbought, below 30 oversold.
- MA20 / MA60 (moving averages)
- The 20- and 60-day average price. Price above them signals a firmer short-term trend.
- vs 52-week high
- How far below the past year's peak the price sits now (%).
All figures are for reference only; how they read varies by sector and over time.
Sources: Korea FSC market-price API (data.go.kr), OpenDART, KRX/KIND — public data only.
Bong Stocks presents public-data-based information for reference only. It is not investment advice and contains no target prices, ratings, or buy/sell recommendations. Verify independently before making any decision.