KAI's Q3 profit beats forecasts as brokers flag delivery risks

Target cuts followed Korea Aerospace Industries (KAI)’s third-quarter profit beat as brokers flagged helicopter delays and questioned how much of the earnings improvement would persist. In Nov. 4, 2026, reports, Daishin Securities cut its target 7.0% to 173,000 won, while iM Securities lowered its target 10.6% to 135,000 won.

Exchange-rate-related revisions to estimated project costs helped lift operating profit above forecasts. After removing the currency benefit and adding back one-off charges, however, Shinhan Securities estimated profit below consensus in its Nov. 4 analysis.

How much of the profit beat was recurring?

Revenue rose 51.6% from a year earlier to 1.0643 trillion won, while operating profit increased 31.9% to 79.4 billion won, a 7.5% margin. Profit exceeded the 75.3 billion won market consensus cited by DS Investment & Securities in its Nov. 4 review and the 76 billion won consensus cited by SK Securities on the same date. SK described the result as in line with expectations.

The currency benefit was about 40 billion won, against roughly 30 billion won of one-off charges, according to the Nov. 4 analysis by Kiwoom Securities and SK’s review.

Estimates differed in scope. One-off costs including consolidation adjustments totalled about 37 billion won, according to Hanwha Investment & Securities’ Nov. 4 review. The currency benefit was about 30 billion won in Yuanta Securities Korea’s analysis published that day.

For Shinhan, removing the currency benefit and adding back one-off charges yielded operating profit of 69.4 billion won, 8.7% below consensus. This was the brokerage’s adjusted estimate, rather than a separately reported company measure.

What drove the target cuts?

The sample comprises 10 Nov. 4 brokerage reports available on Naver Finance. Their targets have a simple mean of 162,000 won and a median of 161,500 won. These are sample statistics, not a market-wide consensus.

Brokerage	Target, Nov. 4, 2026	Report-stated revision
DS Investment & Securities	186,000 won	Not shown
Kiwoom Securities	185,000 won	Not shown
Yuanta Securities Korea	182,000 won	Not shown
Daishin Securities	173,000 won	Cut 7.0%
Mirae Asset Securities	173,000 won	Not shown
Hanwha Investment & Securities	150,000 won	Not shown
SK Securities	150,000 won	Not shown
Eugene Investment & Securities	146,000 won	Maintained
Shinhan Securities	140,000 won	Not shown
iM Securities	135,000 won	Cut 10.6%

The revision column records only changes explicitly described in the Nov. 4 reports. It does not calculate changes against older reports; “Not shown” means no revision is stated here.

Lower earnings estimates and a reduced valuation multiple drove Daishin’s cut. For its target calculation, the brokerage applied a P/E of 30.8 times forecast 2028 earnings attributable to shareholders. Separately, it put KAI’s trading P/E at 20.3 times 36-month forward earnings, against 18.0 times for global peers. Its analysts argued that a first KF-21 export order in the fourth quarter could ease valuation concerns.

Lower valuations at benchmark companies prompted iM’s target reduction. The 146,000 won target was maintained in the Nov. 4 report from Eugene Investment & Securities.

How do delivery delays affect revenue?

An engine defect had disrupted deliveries of KAI’s Light Armed Helicopter, or LAH, according to iM. The brokerage reported a November restart but expected only two or three additional deliveries by year-end, after seven in the first half, leaving roughly 20 aircraft behind schedule.

Its report discussed a potential revenue shortfall of 400 billion to 500 billion won against the original 5.7 trillion won annual guidance. Its financial forecast tables, however, projected 2026 revenue of 5.0763 trillion won, a shortfall of 623.7 billion won. The narrative and tables therefore imply different shortfalls; the report does not explain the difference.

Additional Iraq bad-debt provisions and up to 100 billion won of fourth-quarter in-house development spending were profit risks identified by Yuanta.

On deliveries already completed, the brokerage reported that KAI delivered two KF-21 fighters to the Korean military in the third quarter. Export revenue from Malaysian and Polish contracts was recognised as work progressed.

KAI closed at 99,000 won on Nov. 9, down 3.51% on the day.