PER, EPS, PBR and BPS are calculated in-house from the last 4 quarters (2025Q3–2026Q2) · Dividend yield is based on ₩0 per share · Prices as of the 2026-10-02 close
After a prolonged earnings slump through 2025, revenue and operating profit turned upward in the first half of 2026, with expanding defense orders offsetting much of the automotive parts slowdown.
Korea's oldest forging company holds an 80% domestic market share in commercial-vehicle axle shafts while also producing defense components such as 155mm artillery shells
Operating margin fell to 2.8% in 2025, but revenue and operating profit improved for two straight quarters in early 2026, confirming a recovery trend
A December 2025 contract with Daesin Corporation for M107 155mm complete projectile bodies (KRW 17.4bn, 12.5% of revenue) is expanding the defense revenue share
US tariff effects and OEM production adjustments are weighing on utilization rates and fixed-cost burden in the automotive parts segment
Intensifying price competition from Indian forging companies with roughly KRW 600bn in annual revenue is a structural variable for the auto parts business
Hanil Forging was founded in 1966 and is Korea's oldest specialized forging company, headquartered in Jincheon, Chungcheongbuk-do. The Ministry of Trade, Industry and Energy designated it as a company for auto parts localization, affiliation, and specialized manufacturing.
It listed on KOSDAQ in 1996 and established a Thailand subsidiary in 2007 to build an export base in Asia. The business is organized around two pillars: automotive parts and defense.
In automotive parts, axle shafts and spindles for medium and heavy commercial vehicles are the core products; according to a March 2025 report, axle shafts held an 80% domestic market share, and all of Hyundai's 1-ton Porter trucks use the company's axle shafts.
Overseas, long-term supply contracts with Ford, Stellantis, Nissan, and GM across 14 countries meant exports accounted for 58.6% of revenue as of that report.
In defense, the company produces 155mm artillery shells, 60mm mortar rounds, and warhead structures used in Hyunmoo missiles, and it recently signed a single supply contract with Daesin Corporation for M107 155mm complete projectile bodies worth KRW 17.4 billion, or 12.5% of revenue, expanding its defense revenue share.
In auto parts, however, competition has intensified as Indian forgers such as Ramkrishna Forgings and Bharat Forge, each with roughly KRW 600 billion in annual revenue, pursue aggressive pricing in the US market backed by government support.
The company is diversifying its product portfolio through localization of high-alloy steel materials and entry into large-engine-valve forgings to strengthen profitability.
| Quarter | Revenue | Operating profit | Op. margin |
|---|---|---|---|
| 2025Q2 | ₩32.7B | ₩1.4B | 4.1% |
| 2025Q3 | ₩32.3B | ₩1.5B | 4.8% |
| 2025Q4 | ₩31.7B | -₩200M | −0.6% |
| 2026Q1 | ₩35.6B | ₩2.6B | 7.2% |
| 2026Q2 | ₩43.1B | ₩5B | 11.6% |
| Year | Revenue | Operating profit | Net income (parent) | Op. margin | ROE | Debt-to-equity |
|---|---|---|---|---|---|---|
| 2022 | ₩177.4B | ₩14.6B | ₩6.9B | 8.2% | 6.2% | 123.6% |
| 2023 | ₩178.2B | ₩15.2B | ₩7.5B | 8.5% | 6.2% | 108.3% |
| 2024 | ₩139.4B | ₩8.3B | ₩6.2B | 5.9% | 4.7% | 92.0% |
| 2025 | ₩126.6B | ₩3.5B | ₩1.5B | 2.8% | 1.1% | 77.2% |
Consolidated basis (financial statements including subsidiaries) · Final figures from DART filings · Net income attributable to owners of the parent · Data as of 2026-08-23
Consolidated revenue edged up from KRW 177.4 billion in 2022 to KRW 178.2 billion in 2023, with the operating margin improving from 8.2% to 8.5%. In 2024, however, revenue fell to KRW 139.4 billion and operating profit dropped sharply to KRW 8.3 billion, lowering the operating margin to 5.9%.
In 2025, revenue declined further to KRW 126.6 billion, with operating profit shrinking to KRW 3.5 billion and net income attributable to owners falling to KRW 1.5 billion, pushing the operating margin down to 2.8%.
FnGuide attributed the 14.1% revenue decline, 51.3% operating profit decline, and 52.6% net income decline for the nine months through the third quarter of 2025 to weaker global auto parts demand amid a global slowdown, a slump in steel exports, and raw material supply instability.
On a quarterly basis, net income attributable to owners was a loss of KRW 0.37 billion in the second quarter of 2025, before turning to a profit of KRW 1.27 billion in the third quarter even as revenue slipped slightly to KRW 32.3 billion.
The fourth quarter reverted to losses, with revenue of KRW 31.7 billion, an operating loss of KRW 0.2 billion, and a net loss of KRW 0.5 billion.
The rebound became clear in 2026, with first-quarter revenue of KRW 35.6 billion, operating profit of KRW 2.6 billion, and net income of KRW 2.6 billion, followed by a second quarter in which revenue jumped to KRW 43.1 billion with operating profit of KRW 5.0 billion and net income of KRW 3.0 billion, the highest quarterly revenue and operating profit in the observed five-quarter window.
This trajectory shows a shift from the loss-making, sluggish stretch that persisted throughout 2025 into a recovery path in the first half of 2026.
The automotive parts segment, centered on axle shafts and spindles for commercial vehicles, has results directly linked to OEM production adjustments.
In a March 2026 disclosure, the company cited lower utilization from US tariff effects and OEM production cuts, along with rising fixed-cost burden, as key drivers of earnings volatility.
In the competitive landscape, large Indian forging companies with roughly KRW 600 billion in revenue pursuing aggressive pricing in the US market backed by government support are cited as a structural variable.
By contrast, the defense segment has emerged as a growth pillar as demand for conventional artillery shells rose after the war in Ukraine. The global defense industry estimates demand for 155mm shells at around 100 million rounds over the next decade.
Market researcher Fortune Business Insights projected the global 155mm ammunition market to grow from USD 3.46 billion in 2025 to USD 9.01 billion by 2034, a 12.2% compound annual growth rate.
Hanil Forging participates in this market as a supplier of complete projectile bodies, and while smaller in scale than major defense primes, it has built a dual structure applying forging technology accumulated in auto parts to defense components.
As a result, the company sits at a point where a gradual slowdown in auto parts coincides with structural growth in defense.
The company stated it is building a foundation to secure global market volume through facility investment, smart process management for production stability, and the first domestic application of bevel gear manufacturing technology via newly introduced warm forging equipment.
In defense, revenue recognition from the December 2025 single supply contract with Daesin Corporation for M107 155mm complete projectile bodies (KRW 17.4 billion, 12.5% of revenue) is expected to be reflected progressively in 2026 results.
Based on disclosed results, both the first and second quarters of 2026 showed revenue and operating profit increasing quarter over quarter, confirming recovery signals.
The CEO has a track record of turning the company from a loss to a profit in his first year in 2022, making defense order expansion and cost-management ability key variables for the future earnings direction.
In automotive parts, however, OEM production adjustments and shifts in US tariff policy remain ongoing variables. Product diversification through localization of high-alloy steel materials and entry into large-engine-valve forgings is proceeding in parallel.
Whether the defense segment secures additional contracts and how quickly the auto parts segment's utilization recovers are the key points to watch going forward.
The current share price stands below the company's self-calculated book value per share, placing it in a discount zone relative to net assets.
With results shifting from a loss in the fourth quarter of 2025 to profits in the first two quarters of 2026, valuation metrics are now in a different phase than during the earlier earnings slump. Because dividends have not been paid recently, dividend yield trails the industry average.
Given the small-cap nature of a market capitalization under KRW 100 billion, valuation metrics can be subject to greater volatility from trading volume shifts or defense-theme sentiment.
How quickly defense contract performance flows into the financial statements, alongside the pace of recovery in the auto parts segment, remain the key variables for future valuation assessment.
PER, EPS, PBR and BPS are all calculated in-house (the same method as Naver and Toss) · Dividend yield = cash dividend per share from DART filings (supplemented by KRX) ÷ current price · As of 2026-08-23
The December 2025 contract with Daesin Corporation for M107 155mm complete projectile bodies is worth KRW 17.4 billion, equal to 12.5% of revenue. The global 155mm ammunition market is projected to grow at a 12.2% compound annual rate, reflecting structurally rising demand for conventional munitions. As relatively stable defense revenue grows, the balance of the business portfolio could improve.
After posting an operating loss of KRW 0.2 billion and a net loss of KRW 0.5 billion in the fourth quarter of 2025, both revenue and operating profit rose quarter over quarter in the first and second quarters of 2026.
Second-quarter revenue of KRW 43.1 billion was the highest in the recent five-quarter window, and operating profit of KRW 5.0 billion was also the largest. Two consecutive quarters of improvement suggest a move away from the earlier slump.
Axle shafts maintain an 80% domestic market share, supplying all of Hyundai's 1-ton Porter trucks. Long-term supply contracts with Ford, Stellantis, Nissan, and GM across 14 countries provide a broad customer base. Forging technology accumulated since the company's founding in 1966 acts as a barrier to entry.
Revenue fell for two consecutive years, from KRW 178.2 billion in 2023 to KRW 139.4 billion in 2024 and KRW 126.6 billion in 2025. The company cited US tariff effects and lower utilization from OEM production adjustments, along with rising fixed-cost burden, as causes. The operating margin also declined from 8.5% in 2023 to 2.8% in 2025.
FnGuide pointed to a slump in steel exports and raw material supply instability amid the global economic slowdown as factors behind the earnings deterioration. With fixed-cost burden already elevated, lower utilization could intensify margin pressure. Exposure to raw material price swings remains a structural feature.
Indian companies such as Ramkrishna Forgings and Bharat Forge, each with roughly KRW 600 billion in annual revenue, are pursuing aggressive pricing in the US market with government backing. Given its disadvantage in economies of scale, maintaining price competitiveness could be a burden for Hanil Forging. This is a variable for the long-term growth of the auto parts segment.
Automotive parts revenue is directly tied to production adjustments by a small number of OEMs. The defense segment also shows high dependence on specific contracts, as the single M107 deal accounts for 12.5% of revenue. Demand shifts at key customers can flow through to results quickly.
In a March 2026 disclosure, the company explicitly cited US tariff effects as a cause of earnings volatility. Given its export-heavy structure, changes in trade policy in major markets including the United States could affect costs and sales terms. The ability to offset this through price increases depends on negotiating power with OEM customers.
The M107 155mm complete projectile body contract was disclosed as a single sales and supply agreement worth KRW 17.4 billion in total. Defense orders can be irregular in timing and scale depending on government procurement schedules or geopolitical conditions, creating volatility in revenue recognition. Securing follow-on contracts will determine the continuity of defense revenue.
Check whether the regular third-quarter (July-September 2026) earnings disclosure confirms the recovery trend seen in the first two quarters.
Monitor the progress of revenue recognition under the M107 155mm supply contract (KRW 17.4 billion) and whether follow-on defense contracts are signed.
Continue tracking how changes in US tariff policy and OEM production adjustments affect axle shaft and spindle order volumes.
Check disclosures from Ramkrishna Forgings and Bharat Forge on US market share and pricing to assess shifts in the competitive landscape.
Verify whether the bevel gear manufacturing technology using warm forging equipment moves into mass production and secures additional orders.
Hanil Forging is a small-cap forging company that runs a dual business of commercial-vehicle axle shafts and defense components such as 155mm artillery shells.
The improving trend that continued through 2023 reversed sharply in 2024-2025 amid weaker auto parts demand, US tariff effects, and raw material supply instability, pushing the 2025 operating margin down to 2.8%.
However, revenue and operating profit rose for two consecutive quarters in the first half of 2026, confirming a shift into a recovery phase, and the M107 155mm complete projectile body contract signed in December 2025 is serving as a catalyst for expanding the defense revenue share.
Still, in the auto parts segment, OEM production adjustments and price competition from Indian forgers remain persistent headwinds, and the defense contract carries a non-recurring characteristic given its reliance on a single deal.
Going forward, whether the recovery continues into third-quarter results, the pace of revenue recognition under the M107 contract, and whether follow-on defense orders materialize will be the key variables shaping the earnings trajectory.
Given the company's small market capitalization, volatility in metrics driven by defense-theme sentiment or trading volume shifts also warrants continued observation.
Report written 2026-09-05 · Data as of 2026-09-04
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