Even When War Ends, Weapons Do Not Stop

DEFENSE · REARMAMENT · 2026.06.15

Even After the War Ends

The Weapons Don't Stop

Hanwha Aerospace · LIG Nex1 · Korea Aerospace Industries

012450 · 079550 · 047810

The Paradox of Ending a War — The Day Peace is Declared, Rearmament Begins

June 15, 2026 · Narrative constructed after Goguma Team research and multi-round discussions
Paradox of Peace · Two Fronts · Fundamentals by Business Unit · Sell or Hold · Bull/Super-Bull Take-Profit Prices

Onion (Macro/Geopolitics) · Acorn (Industry/Reality) · Peanut (Risk/Value) · Carrot (Chart/Supply-Demand) · Sweet Potato (Summary)

Prologue

The Day the War Ended, Defense Stocks Rose

On June 14, 2026, the US President announced a ceasefire agreement with Iran. The 106-day war had been settled, the Strait of Hormuz was reopened, and an official signing was scheduled for June 19. By all conventional logic, defense stocks should have fallen. The long-standing consensus is that when war ends, demand for weapons ends as well. However, on that day, Korean defense stocks rose — LIG Nex1 was up +11% for the day, and Hanwha Aerospace also showed strength.

This paradox is the starting point of this report. The market did not sell off defense stocks despite the news of the ceasefire. This means the momentum is not tied to 'a war in the Middle East,' but rather toa larger structural trend — global rearmament. The end of the war with Iran does not mean global peace. The Russia-Ukraine front and European rearmament are continuing on completely separate tracks; in fact, the moment a ceasefire is declared, each nation enters a 'rearmament cycle' to replenish depleted inventories and order next-generation weapons.

There is an even deeper change occurring. European car factories are turning into weapons plants. Volkswagen plants have begun producing interceptor missile components, and auto parts factories acquired by Rheinmetall have started manufacturing armored vehicles. NATO has raised its defense spending target to 5% of GDP. However, it will take time for Europe to develop its own production capacity, and it is the Korean defense industry (K-Defense) that is filling that gap.

This report provides answers to three questions in sequence: Why is a ceasefire not a negative factor for the defense industry (The Paradox of Ending a War)? Who are the beneficiaries of the two fronts — Middle East air defense reconstruction and European rearmament? And based on the fundamentals of each business unit, is it time to sell these stocks or load up — including the target take-profit prices. We provide answers based on multiple team discussions and data from brokerage firms and the industry.

Chapter 1

The Paradox of Ending a War — Why Peace Calls for Weapons

"When the war ends, the defense industry is finished." This conventional wisdom is intuitive, but the reality of 2026 points to the exact opposite. The end of a war is not the end of demand, but the beginning of a different kind of demand.

There are three reasons. First, the end of the Iran war is not 'global peace.' The Russia-Ukraine front, Europe's vigilance against Russia, and tensions in the Indo-Pacific are all proceeding separately. The settlement of one region does not lead to global arms reduction. Second, the period immediately following a ceasefire is actually the start of rearmament. A 'rearmament cycle,' where nations replenish ammunition and missile stocks depleted by war and order next-generation weapons that reflect the lessons learned from the conflict, is concentrated in the 1–2 years after a ceasefire. Third, in the case of the Middle East, the end of the war means 'rebuilding air defense networks' — this is the demand to rebuild collapsed defensive perimeters and stockpile interceptor missiles in preparation for the next conflict.

The market's reaction proves this. The fact that defense stocks rose on the day the ceasefire was announced means that investors interpreted this momentum not as a 'single Middle East event' but as 'structural rearmament.' However, there is one caveat — for stocks that were heavily driven by the 'tension premium' in the Middle East (interceptor missile stocks), the ceasefire could serve as a trigger for short-term profit-taking. This is why it is necessary to distinguish between structure and tactics.

Key takeaway of Chapter 1. A ceasefire may not be the end of the defense sector but a signal for the start of a 'rearmament cycle.' The key is where the momentum is positioned — if it was based on 'Middle East tension,' the ceasefire is a negative factor; if it is based on 'global rearmament,' demand continues regardless of the ceasefire. The momentum for the Korean defense industry is more heavily tied to the latter.

Chapter 2

Two Fronts — Middle East Air Defense and European Rearmament

Demand for the Korean defense industry is currently opening up on two fronts simultaneously: Middle East air defense reconstruction and European rearmament. And the beneficiary stocks for these two fronts are different.

Front 1 — Middle East: Rebuilding Air Defense Networks

The Middle East is currently buying 'air defense networks,' not 'fighter jets.' Gulf nations that experienced the war with Iran are stockpiling interceptor missiles and redesigning their defensive networks. Korea's Cheongung-II (medium-range surface-to-air missile) offers rapid delivery at less than half the cost of the US Patriot, and it has already secured references from the UAE ($3.5 billion), Saudi Arabia ($3.2 billion, 10 batteries), and Iraq ($2.8 billion). The ceasefire does not end this demand; rather, it leads to inventory replenishment and new defense network budgets.

Front 2 — Europe: Rearmament and the Transformation of Car Factories

Europe is buying 'artillery, ammunition, and armored vehicles.' NATO has agreed to raise defense spending to 5% of GDP by 2035 (3.5% direct military spending + 1.5% related security costs), and Germany is increasing its defense spending from approximately 95 billion euros in 2025 to 117 billion euros in 2026, and 162 billion euros by 2029. A more symbolic change is the transformation of car factories — Volkswagen plants have begun making interceptor missile parts, auto parts factories acquired by Rheinmetall are making armored vehicles, and former tram factories acquired by KNDS have started manufacturing Leopard 2 tanks.

56 Trillion Won

2026 K-Defense export forecast (cumulative) — Demand opened simultaneously by European and Middle Eastern rearmament. Explosive increase compared to the previous year.

Two fronts, different beneficiaries. The immediate beneficiary of the Middle East (air defense) is LIG Nex1 (Cheongung-II), and the immediate beneficiary of Europe (artillery/armored vehicles) is Hanwha Aerospace (K9/Chunmoo). While Europe developing its own production capacity is a long-term threat, there is a 'window of opportunity' for K-Defense to fill the gap, as it will take 2–3 years for Rheinmetall and KNDS to expand their capacity.

Chapter 3

Hanwha Aerospace — The Structural Winner

Of the three companies, it is the largest, the most diversified, and has the most reasonable valuation. Its business structure, which spans both Europe and the Middle East, puts it at the center of a 'structural 2–3 year composite benefit.'

Q1 2026 consolidated revenue is 5.751 trillion won, with an operating profit of 638.9 billion won (11.1% operating margin). For the full year, revenue is projected at 30 trillion won, with an operating profit of 4.24 trillion won (+37% YoY) and an operating margin of 14.1%. Its forward P/E ratio is approximately 27x, the lowest among the three.

Business Unit	Key Products	Orders/Drivers
Ground Defense	K9 Self-Propelled Howitzer, Chunmoo MLRS, Redback Armored Vehicle	Poland K9 2nd batch $2.6B, Romania 1.3T won (54 K9 units), Norway Chunmoo $922M — Core of profit
Aviation Engines	F414 licensed production/maintenance for KF-21	Stable revenue, long-term investment in proprietary fighter engine development for the 2030s
Hanwha Systems (stake)	Cheongung-II radar, KF-21 AESA	Defense electronics leverage
Hanwha Ocean (stake)	Naval vessels, US Navy MRO (maintenance)	Performance volatility is high, but expectations for US Navy contracts are reflected in the multiple
Space (Satrec Initiative)	Satellites, Space launch vehicles	Long-term option

Hanwha's strength is that "a single stock contains Europe (K9/Chunmoo), the Middle East (Cheongung launchers/ground firepower), maritime (Hanwha Ocean), and space." It is structured to benefit regardless of which front opens. An operating margin in the 14% range cannot be explained without an increase in the proportion of high-margin exports. The consensus target price is approximately 1.83 million won, which is +65% compared to the current price.

Chapter 4

LIG Nex1 — The Tactical Winner, and the Discovery of Reloads

It is the most direct beneficiary of the Middle East air defense reconstruction. The Cheongung-II has been proven in combat during this war, and above all, the essence of air defense has been revealed to be a 'business of constantly refilling interceptors' rather than 'selling a battery once.' However, one must also consider the flip side: that this expectation is already deeply reflected in the stock price.

In Q1 2026, revenue was 1.1679 trillion won, with an operating profit of 171.1 billion won, achieving an operating margin of 14.65% — a sharp rebound from the previous quarter (2.75%), driven by large export revenue recognition and improved mix. For the full year, revenue is projected at 5.13 trillion won and operating profit at 451.1 billion won (+41% YoY).

Business Unit	Key Products	Drivers
Guided Weapons	Cheongung-II, Hyungung, Haegung (Ship-to-air/Surface-to-air)	Core of revenue and margins. Middle East export references
Surveillance/Recon	Radar, Electro-optics, Electronic Warfare	Defense electronics ecosystem
Avionics	KF-21 EW system	Linked to complete aircraft

Cheongung-II is an interceptor with a price about one-third of the Patriot PAC-3 (approx. $1.1 million) and a rapid delivery time (9–12 months). The system and interceptor are handled by LIG Nex1, the radar by Hanwha Systems, and the launcher by Hanwha Aerospace. References for 30 batteries (approx. $9.5 billion) have been built up in the Middle East with the UAE, Saudi Arabia, and Iraq, and in this war, **the Cheongung-II deployed in the UAE successfully intercepted Iranian missiles in combat (citation success rate 96%)**proving its performance — just five days after actual combat, the UAE received its third battery six months ahead of schedule. The decisive change is the asymmetry of supply. US Patriot and THAAD inventories were rapidly depleted by this war (the US used over 10,000 defensive munitions in the first 16 days, and warnings of THAAD depletion emerged by mid-April), and Lockheed Martin cannot guarantee delivery to allies for 4–6 years. The gap where even US allies cannot receive interceptors on time is being filled by the 'alternative demand' of the cost-effective and quickly-delivered Cheongung.

The re-evaluation of 'reload' and the burden of valuation. Before the war, air defense appeared to be a 'one-time order industry selling batteries,' but after experiencing war, it has transformed into a 'recurring revenue industry of constantly refilling interceptors' — the structure of selling a razor once and continuing to sell blades. Even just counting one reload for the 30 batteries in the UAE, Saudi Arabia, and Iraq, recurring demand of over $1 billion is estimated, which is grounds to raise the valuation, currently based on 'battery sales,' to the next level. However, a forward P/E of 52x and P/B of 12.4x are the highest among the three, so for this re-evaluation to be solidified in numbers, it must be confirmed by 'reload order disclosures' rather than reports of combat performance. Until then, the disappearance of the 'Middle East tension premium' following the ceasefire is a factor of short-term volatility.

Chapter 5

Korea Aerospace Industries (KAI) — The Late Runner's Option

Although its profit growth rate (76% in 2026) is the highest among the three, the stock is sluggish. This is because the business structure of 'complete aircraft' with long lead times reacts one step slower to the air defense themes immediately following a ceasefire.

In Q1 2026, revenue was 1.0927 trillion won, with an operating profit of 67.1 billion won, for an operating margin of 6.14% — the lowest among the three. For the full year, revenue is projected at 5.71 trillion won and operating profit at 473.6 billion won (+76% YoY), but this is growth starting from a low base.

Business Unit	Key Products	Drivers/Tasks
Complete Aircraft	FA-50 light attack aircraft, KF-21 Boramae, Surion/LAH helicopters	KF-21 first production unit rollout in Mar 2026, delivery of 40 Block I units (2026–28)
Airframe Parts	Boeing/Airbus civil aircraft supply chain	Linked to civil aviation recovery

Following the 48-unit reference in Poland, the FA-50 has a pipeline including Malaysia (18 units), the Philippines (additional 12 units), the Middle East, and the US trainer market, and the Saudi Air Force is discussing cooperation on the KF-21. However, the reason for the sluggishness is clear: ① the operating margin is low at 6%, ② the valuation (P/E) relative to recent earnings is expensive, ③ there is a long gap before additional FA-50 export announcements, and ④ complete aircraft have longer contract-delivery-revenue recognition cycles than missiles/shells, making them slow to respond to post-ceasefire themes.

Key takeaway of Chapter 5. KAI is not a 'buy now' beneficiary but an 'option to wait for.' The trigger will be the moment when cost stabilization for KF-21 mass production and large FA-50 exports (Middle East/US) are confirmed through contracts. Until then, low profit margins and order gaps will hold it back — the growth rate is attractive, but the stock price will only follow once that growth changes from 'expectation' to 'contract'.

Chapter 6

Four Perspectives — Sell or Hold?

With the same ceasefire and the same numbers, perspectives are divided. The team debated whether 'it is time to sell or load up on defense stocks.' That clash made the conclusion solid.

Onion · Macro/Geopolitics (Bullish)

"Now is not the time to sell, but to load up. The fact that defense stocks rose even with a ceasefire is evidence that the momentum is tied to structural rearmament, not a single Middle East event. NATO's 5% and Germany's double-up are opportunities, not threats — European domestic production has a 2–3 year lead time, and K-Defense is filling that gap. Do not trim just by looking at profit rates."

Acorn · Industry/Reality (Balanced)

"Hanwha is a Buy, LIG is a Hold (partial profit-taking), and KAI is a Hold/Scale-in. Hanwha is the top priority for adding on dips due to its structural position in European artillery, Middle East, naval, and space sectors, trading at a 27x PER with a 14% operating margin. LIG offers the strongest tactical benefits in air defense, but with a 52x PER and 12.4x PBR, it is already priced in, so some rebalancing is necessary. KAI shows growth potential, but is held back by a lack of new orders."

Peanut · Risk/Value (Cautious)

"If you're going to trim, start with LIG; if you're going to add, only add Hanwha. LIG's 52x PER and 12.4x PBR are by far the heaviest burdens among the three, and today's +11% surge is a chase-driven spike. KAI's 'it's cheap because it dropped' narrative is a trap — at a 42x PER, 6% margin, and order backlog, it dropped while still being expensive. The real game begins 60 days after the June 19th signing during follow-up negotiations, so volatility remains high."

Carrot · Chart/Flow (Practical)

"For LIG, manage risk by taking 50% profit due to resistance at previous highs and exposure to post-war volatility, but hold the rest. Hanwha's trend remains intact, so hold and buy the dips. For KAI, don't stop-loss; instead, confirm support and add incrementally. Since war-ending and rearmament increase two-way volatility, the standard strategy is to buy dips incrementally, not to chase."

Our perspectives have converged on one conclusion. The answer to "sell or hold" varies by stock. Hanwha Aerospace is the top priority to hold and add on dips due to its structural benefits and reasonable valuation. LIG Nex1 offers the greatest tactical benefits, but we are holding while taking partial profits to manage risk due to valuation pressure and post-war volatility. For KAI, we are not stop-lossing, but adding incrementally after confirming support, waiting for growth to be confirmed through contracts. The end of the war is not a reason to exit defense stocks, but an opportunity to refine allocations.

Seventh Chapter

Valuation — Bull/Ultra-Bull profit-taking targets and trading strategy

If rearmament is structural, the values of these three companies will chart a higher path based on business fundamentals and order pipelines. The profit-taking targets below are three paths drawn based on brokerage consensus, earnings forecasts, and industry facts.

Hanwha Aerospace (012450) — Current approx. 1,107,000 KRW

Scenario	Profit-taking Target	Rationale
Base	1,400,000 KRW +26%	2026E operating profit of 4.24 trillion KRW (+37%) and PER normalization. Poland/Romania deliveries in progress.
Bull	1,830,000 KRW +65%	Consensus target price. Follow-up European artillery/Chunmoo + 2nd phase Middle East air defense launcher benefits.
Ultra-Bull	2,290,000 KRW +107%	55x PER. Large-scale follow-up European orders + Hanwha Ocean defense premium + space options realized simultaneously.

Best valuation appeal and order visibility among the three. Top priority for adding: scale in on dips around 1.05 million KRW, stop-loss at 1 million KRW. Structural 2-3 year compound benefits.

LIG Nex1 (079550) — Current approx. 857,000 KRW

Scenario	Profit-taking Target	Rationale
Base	1,100,000 KRW +28%	Cheongung-II Middle East export recognition + interceptor reload visibility.
Bull	1,350,000 KRW +58%	UAE reload orders + new Qatar/Kuwait orders + alternative demand due to Patriot shortages.
Ultra-Bull	1,550,000 KRW +81%	Multiple re-rating via reload recurring (razor-blade) model + entry into European air defense. Inelastic air defense premium.

Downside is firm due to practical verification and inelastic demand, but 52x PER/12.4x PBR is a major burden. Reload order disclosure is the trigger for further upside. Scale in around 750k KRW / scale out around 900k KRW, avoid chasing after spikes, stop-loss at 760k KRW.

Korea Aerospace Industries (047810) — Current approx. 147,600 KRW

Scenario	Profit-taking Target	Rationale
Base	185,000 KRW +25%	Full-scale KF-21 mass production + 2026E operating profit +76%.
Bull	223,000 KRW +51%	Consensus target price. FA-50 new export (Middle East/Europe) visibility.
Ultra-Bull	265,000 KRW +80%	Large-scale FA-50 Middle East/US orders or conversion of KF-21 export MOU into contract.

Highest growth rate, but held back by margins and order gaps. Instead of stop-loss, scale in at 140k support (patience), stop-loss at 135k KRW. Waiting for the trigger that turns growth into 'contracts'.

Summary — Refine, don't exit. The end of the war is not a reason to empty out defense positions. Hanwha Aerospace (structural compound benefits) is for holding/adding (1st priority), LIG Nex1 (tactical benefits) is for holding/partial profit-taking, and KAI (late bloomer) is for patient incremental adding instead of stop-loss — The conclusion is to refine the weight of these three stocks according to the rearmament cycle. Do not sell all at once; realize profits in stages at Bull/Ultra-Bull levels.

Eighth Chapter

Signs that the narrative is shifting

The rearmament cycle is not eternal. If we have charted the path upward, the following are signals that the path is blocked.

Signal	Meaning	Response
Breakdown of 60-day follow-up negotiations / Re-clash	The US-Iran follow-up negotiations after the 6/19 signing are the real game. Breakdown leads to renewed Middle East tension (short-term positive for defense, but volatility↑).	LIG volatility expansion — Prepare by taking partial profits at previous highs resistance.
Early expansion of domestic production capacity in Europe	If Rheinmetall/KNDS expansion accelerates, the 'window of benefit' for K-Defense shortens.	Check Hanwha's European order progress. Verify diversification into Middle East/Asia.
Valuation overheating correction	LIG 52x PER/12.4x PBR, KAI 42x PER — If performance fails to follow expectations, multiple normalization occurs.	Take partial profits when trim targets (LIG 1.14M+, KAI 220k+) are reached. Shift weight to Hanwha.
Order momentum gap	Prolonged stock sluggishness, especially if KAI/FA-50 additional exports are delayed.	Refrain from increasing weight until contracts are confirmed; buy support levels incrementally.

Closing. It is no coincidence that defense stocks rose on the day the war ended. Peace in one region does not reduce global military spending; rather, the end of a war signals the beginning of rearmament to replenish exhausted weapons and prepare for the next phase. In this phase, where European car factories build weapons and the Middle East rebuilds its air defense networks — Hanwha Aerospace is the structural winner across both fronts; LIG Nex1 is the winner in Middle East air defense, verified by real-world combat, and is being re-evaluated for interceptor reload demand; KAI is the late starter waiting for contracts. The end of the war is not a reason to exit these stocks, but an opportunity to adjust weights according to the rearmament timetable — watch the signals, and follow the discipline of climbing and descending in stages.

This report is a narrative analysis summarizing the research and multiple discussions of the Goguma Team (Yangpa, Dotori, Peanut, Carrot, Goguma).
The suggested target prices are scenarios based on brokerage consensus and the latest industry trends, and are not investment advice. Investment decisions and responsibilities rest solely with the investor.
As of June 15, 2026 · Hanwha Aerospace (012450) · LIG Nex1 (079550) · Korea Aerospace Industries (047810)