Hanwha Systems (272210.KS): MASGA valuation fading away — Downgrade to Reduce

Nomura downgrades Hanwha Systems (272210.KS) from Neutral to Reduce and lowers its TP to KRW60,000 (from KRW61,000), implying 25.0% downside versus the 18 September 2026 closing price of KRW80,000. The downgrade reflects low visibility on realizing the term-sheet contract with UAE EDGE (a government-owned defense company) and the announced sale of the Hanwha Philly Shipyard stake. HS has filed to sell its 60% ownership of Hanwha Philly Shipyard to Hanwha Defense USA Shipbuilding for KRW325bn. Given the KRW4.2tn market value of HS's Philly ownership, we estimate a KRW3.5tn negative impact on HS's valuation, and its effective ownership will fall from 60% to 5.6%. We amend 2027F revenue/OP by -18.1%/+4.2% as Hanwha Philly Shipyard will no longer be consolidated. Our SOTP-based TP values the Defense division at KRW8.1tn (previously KRW8.4tn) and the ICT division at KRW1.4tn (previously KRW1.3tn). The 32.8x target P/E for Defense is based on a 40% discount to LIG D&A's target P/E, reflectin