Pay attention to K-defense, the biggest beneficiary of the Trump 2.0 era!

From technology to product, market, and industry maps
A New Investment Strategy Discovered Through Exploring the Past and Future of K-Defense

Anyone who has invested at all, even those who have not, will have heard that “K-defense industries are doing well overseas.”
Since the large-scale arms export contract with Poland in 2022, 'K-defense industry' has become a phenomenon.
However, few people actually know what K-Defense's representative products are, what characteristics they have, and which companies are making them.
If you're an investor, you know that understanding an industry properly before investing can also help you predict its future.
This book introduces the core weapons exported by our country's defense industry and analyzes the current status of the companies that manufacture these weapons, helping readers predict the present and future of the K-defense industry.

Since the defense industry's specialty is weapon production, knowing who makes what weapons, how they are made, and what their future development prospects and demand will be is crucial to determining the capabilities and future of the defense industry producing those weapons.
In other words, knowledge of our military's core weapons and the core weapons exported by our defense industry is the best means of predicting the present and future of the K-defense industry.
This is not much different from the fact that in order to invest in the entertainment industry, you need to know which entertainment company is debuting which singer in which genre, and what kind of performance and achievements those singers are achieving.

--- p.33

The book begins with macro questions such as, "Why and how has our defense industry become stronger?" and "How long will the current high growth rate last?"
In addition, we will cover the specific items we will be selling this year, next year, and by 2027, when we will leap forward as one of the top four defense powers, their competitiveness, and what we are currently preparing for the future defense industry.
Next, we compare and analyze representative rival companies in the South Korean defense industry, examining their competitiveness and capabilities as well as the types of competition they face.
The defense industry is fundamentally a sales business targeting the government, and it will be interesting to read this book while keeping in mind that competition in the domestic market for the Korean defense industry directly determines the performance of overseas exports and the fate of companies.
Finally, in the latter part, we examine the long-term prospects of our defense industry, predicting future warfare and the rapidly changing environment of the modern battlefield.
Through this book, readers will learn how business is conducted and exports are conducted in the highly specialized defense industry, unlike other general industries, how the competitiveness of K-defense products has increased, and what future prospects are possible.
I sincerely hope that this book will enhance readers' understanding of South Korea's defense industry and help them examine and predict the rise and fall of defense companies, their performance, and their future.

--- p.35

It wasn't just that it was superior in terms of price.
What's great about the K9 is that it has maintained a nearly constant price regardless of inflation despite being produced for 20 years, thanks to its incredible cost control capabilities.
As shown in the table below, the production costs for the first and eleventh mass productions were 3.7 billion won and 3.9 billion won, respectively. Considering the inflation over the past 20 years, it can be seen that the cost was managed almost miraculously.
This remarkable cost control capability is simply astonishing, especially considering that the selling prices of the American and German self-propelled guns, which are the K9's comparable targets, have nearly doubled over the same period.
In terms of performance, the K9 is a world-class product that satisfies all the performance requirements of a self-propelled artillery in modern warfare.

--- p.90

Currently, KAI is planning the KF-21SA, an export version of the KF-21.
In particular, we are pursuing a plan to develop a future air combat system in which the KF-21SA fighter jet, unmanned aircraft, and 6G low-orbit communication satellites are developed simultaneously, and in which the KF-21SA conducts joint operations with unmanned aircraft through low-orbit communication satellites, in cooperation with Middle Eastern partners.
Recently, Middle Eastern countries have been investing heavily in the development of science, technology, and industries that will not only enhance fighter performance but also replace the energy industry. The KF-21EX, an upgraded version of the KF-21, is a complex concept that goes beyond simple fighter development and encompasses unmanned aerial vehicles (UAVs) and satellites. Therefore, KAI intends to simultaneously transfer aircraft, drone, and space technologies to Middle Eastern countries and pursue joint development.
This joint development package is unprecedented in the global defense industry, and is expected to bear significant fruit if politicians in Middle Eastern countries are determined to achieve it.
Central and South America, Asia, and Eastern Europe are also strong export markets for the KF-21.
However, these markets have less investment capacity than the Middle East and require high-performance fighter jets at a reasonable price.
Therefore, whether the KF-21 can continue to maintain its current level of 'cost-effectiveness' and gain an advantage over its competitors is expected to be the biggest determining factor in future exports.

--- pp.176-177

Meanwhile, a milestone that will forever be remembered in the history of the Korean defense industry was achieved in December 2011: the successful export of three domestically produced DSME1400 submarines to Indonesia under the name Nagapasa for a total of 1.3 trillion won.
This success made South Korea the world's fifth submarine exporter.
Furthermore, this was a symbolic event that proved that the technological prowess of the Korean shipbuilding industry was truly superior, as it was achieved through victory in the export competition with TKMS of Germany, which had previously transferred technology to Korea.
But in fact, this success is not only due to technological prowess, but also to various timing and conditions that worked as luck for Korea.

--- p.216

The K239 Cheonmu, developed from 2009 to 2013 at a cost of 130 billion won, is a multiple rocket launcher that can carry various types of guided and unguided rockets and surface-to-surface missiles. As of 2024, it boasts the world's highest level of firepower among weapons of its class.
In the future, a budget of approximately 3.3 trillion won will be invested to deploy more than 200 multiple rocket launchers and rocket bombs for the Korean military.
Let's take a look at some of the characteristics of the Cheonmu as a multiple rocket launcher.
Compared to other equipment of the same class, Cheonmu has powerful firepower while maintaining low operating costs, and its various performances for avoiding enemy attacks in battle have also been greatly improved compared to existing equipment.
This is thanks to the Cheonmu's innate blend of features from the M270MLRS, a US-developed tracked rocket launcher, and the Hi-MASS wheeled rocket launcher. The MLRS and Hi-MASS are currently in service with some of the ROK Army's rocket launchers and are rivals to the Cheonmu in the global export market. Comparing these two rocket launchers with the Cheonmu further highlights the Cheonmu's unique characteristics.

--- pp.302-303

In other words, in the Korean defense industry, if it cannot meet domestic military demand and supply to the military, exports are impossible.
This is due to two problems.
One reason is that most of the system development of Korean weapons is led by ADD, not companies.
In other words, when ADD develops, the company receives technology from ADD and produces it.
However, ADD is an organization that develops weapons that can only satisfy the needs of the Korean military, and therefore K-defense industry naturally becomes a government-led industry.
Another problem is that Korea's export destinations only want to buy weapons that are actually used by the Korean military.
Since the ROK military possesses conventional forces on a world-class scale, the fact that a weapon is “operated by the ROK military” serves as a kind of guarantee of its performance.
Moreover, the greater the number of weapons purchased by the Korean military, the greater the overall economies of scale achieved, which in turn allows overseas customers purchasing such weapons to benefit from lower parts and maintenance costs.
For this reason, K-defense companies are desperately trying to secure the demands of the Korean military.

--- pp.360-361

In any industry, the rise and fall of a company depends on how well it predicts the future.
It is no exaggeration to say that predicting which products will be popular in the future and what their production volume and market share will be and preparing for them is, in fact, the core and everything of corporate management.
From that perspective, predicting the future of the defense industry becomes even more difficult.
This is because the market characteristics of the defense industry are a mixture of advantages over the civilian market and difficulties that cannot be compared to the civilian market.
If we consider the defense industry as simply a supply chain—that is, an industry that supplies products and services to the government—it typically takes five years to decide what product or solution to create, another five years to develop and produce it, and about 30 years to maintain it.
In other words, it is a business that must be viewed from a very long-term perspective, to a degree that cannot be compared to a single item from a general company.

--- pp.424-425