Future of the South Korean Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2024

  • ID: 4760260
  • Report
  • Region: South Korea
  • 168 pages
  • GlobalData
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  • Hanwha Techwin
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  • Poongsan Corporation
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  • MORE
Future of the South Korean Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2024

Summary

South Korea, or officially called the Republic of Korea, is among the leading economies within Asia. While the relationship between South Korea and the Democratic People’s Republic of Korea (DPRK) or North Korea has traditionally been plagued by mutual distrust and a hostile defense posture, since 2017, the two countries have adopted several Confidence Building Measures (CBM) to improve relations and deescalate. However, despite their efforts, the sustainability of long-term peace in the Korean peninsula is contingent on North Korea relinquishing their nuclear weapons and only a total disarmament of the North Korean nuclear arsenal can ensure peaceful reunification or co-existence in the long-term.

Against this backdrop, it is pertinent for South Korea to continuously invest in military modernization programs and either modernize or phase out relatively aging military equipment with modern platforms capable of securing South Korean strategic interests over the next decade. In July 2018, the South Korean MND enacted a Defense Reform 2.0 initiative, which explicitly calls for cutting down the overall personnel strength of the South Korean armed forces from the current 618,000 to 522,000 troops by 2022, as well as cutting back on the top echelons of the ground forces by reducing the number of generals from 436 to just 360 by 2022. The New Defense Reform Plan also intends to make effective use of revolutionary developments in battlefield technologies and military science, with specific emphasis on artificial intelligence. As such, the South Korean DR 2.0 initiative is expected to drive a surge in defense investments over 2020-2024.

South Korea’s defense expenditure, in accordance with its GDP, remained relatively constant throughout the historic period, standing at an average of 2.4% during 2015-2019. However, South Korea’s defense expenditure as a percentage of its GDP is anticipated to increase to an average of 2.6% over the forecast period. The South Korean defense budget, which stands at about US$42.4 billion in 2019, is anticipated to grow to US$57.1 billion in 2024, reflecting a CAGR of 5.94% over the analysis period. Although revenue expenditure is expected to continue dominating South Korean defense expenditure, South Korea is set to increase its defense capital expenditure from an average of 30.6% over the historic period to an average of 32.4% over the forecast period.

During 2013-2017, South Korea was ranked 12th on the list of the highest arms exporting countries compared to 13th during 2012-2016. The country ranked 13th in terms of the top arms importing countries during 2013-2017, which is the same position held by the country during 2012-2016. However, during the period 2014-2018, South Korea imported the majority of its defense goods from the US, accounting for 50.6% of the market. The military alliance between the US and South Korea fuels its demand for US made and NATO compliant military equipment.

The report "Future of the South Korean Defense Industry - Market Attractiveness, Competitive Landscape and Forecasts to 2024", provides readers with detailed analysis of both historic and forecast defense industry values, factors influencing demand, the challenges faced by industry participants, analysis of industry leading companies, and key news.

In particular, it provides an in-depth analysis of the following -
  • The South Korean defense industry market size and drivers: detailed analysis of the South Korean defense industry during 2020-2024, including highlights of the demand drivers and growth stimulators for the industry. It also provides a snapshot of the country’s expenditure and modernization patterns
  • Budget allocation and key challenges: insights into procurement schedules formulated within the country and a breakdown of the defense budget with respect to the army, navy, and air force. It also details the key challenges faced by defense market participants within the country
  • Porter’s Five Force analysis of the South Korean defense industry: analysis of the market characteristics by determining the bargaining power of suppliers, bargaining power of buyers, threat of substitution, intensity of rivalry, and barriers to entry
  • Import and Export Dynamics: analysis of prevalent trends in the country’s imports and exports over the last five years
  • Market opportunities: details of the top five defense investment opportunities over the next 10 years
  • Competitive landscape and strategic insights: analysis of the competitive landscape of the South Korean defense industry. It provides an overview of key players, together with insights such as key alliances, strategic initiatives, and a brief financial analysis
Companies Mentioned: Korea Aerospace Industries (KAI), Hanwha Techwin, Hanwha Corporation, Hyundai Heavy Industries (HHI), Daewoo Ship Building & Marine Engineering (DSME), Huneed Technologies, STX Engine, S&T Dynamics, Poongsan Corporation, Samsung Thales, LIG NEX1, Doosan DST and Lockheed Martin Korea

Scope
  • South Korea’s defense expenditure as a percentage of its GDP is anticipated to increase to an average of 2.6% over the forecast period. The South Korean defense budget, which stands at about US$42.4 billion in 2019.
  • Between 2015 and 2019, the country’s capital expenditure allocation stood at an average of 30.6% of the total defense budget, and is expected to increase slightly to an average of 32.4% over the forecast period. Overall, South Korea is projected to spend a total of US$82.6 billion on the acquisition of military hardware between 2020 and 2024.
  • The MoD is expected to invest in Light armed helicopter, Sea-Bow naval missile intercept system, PAC-3 missile defense sysem, KSS-3 submarine, Peace Eye early warning aircraft (AEWC) and P-8A Poseidon maritime patrol aircraft.
Reasons to Buy
  • This report will give the user confidence to make the correct business decisions based on a detailed analysis of the South Korean defense industry market trends for the coming five years
  • The market opportunity section will inform the user about the various military requirements that are expected to generate revenues during the forecast period. The description includes technical specifications, recent orders, and the expected investment pattern by the country during the forecast period
  • Detailed profiles of the top domestic and foreign defense manufacturers with information about their products, alliances, recent contract wins, and financial analysis wherever available. This will provide the user with a total competitive landscape of the sector
  • A deep qualitative analysis of the South Korean defense industry covering sections including demand drivers, Porter’s Five Forces Analysis, Key Trends and Growth Stimulators, and latest industry contracts.
Note: Product cover images may vary from those shown
2 of 4

FEATURED COMPANIES

  • Hanwha Corporation
  • Hanwha Techwin
  • Huneed Technologies
  • Poongsan Corporation
  • S&T Dynamics
  • Samsung Thales
  • MORE
1. Introduction
1.1. What is this Report About?
1.2. Definitions
1.3. Summary Methodology
1.4. About the Publisher

2. Executive Summary

3. Market Attractiveness and Emerging Opportunities
3.1. Current Market Scenario
3.1.1. Primary Threat Perception
3.1.2. Military Doctrine and Strategy
3.1.3. Military Fleet Size
3.1.4. Procurement Programs
3.1.5. Ongoing procurement programs
3.1.6. Future procurement programs
3.1.7. Top Procurement Programs By Value (US$ Million) 2019-2024
3.1.8. Social, Political and Economic Environment and Support for Defense Projects
3.1.9. Political and Strategic Alliances
3.2. Defense Market Size Historical and Forecast
3.2.1. South Korean defense expenditure expected to grow significantly over the forecast period
3.2.2. Nuclear threats from North Korea, acquisition of new technology, and reduction in reliance on imports set to drive defense expenditure
3.2.3. Military expenditure as a percentage of GDP is expected to remain at the same level over the forecast period
3.3. Analysis of Defense Budget Allocation
3.3.1. Capital expenditure share to increase over the next five years
3.3.2. Capital expenditure is anticipated to grow at a CAGR of 6.19% over the forecast period
3.3.3. Per capita defense expenditure expected to increase over the forecast period
3.4. Homeland Security Market Size and Forecast
3.4.1. Homeland security (HLS) expenditure expected to grow steadily over the forecast period
3.4.2. The majority of terror threats are from North Korea
3.5. Benchmarking with Key Global Markets
3.5.1. South Korean defense expenditure expected to remain modest compared to leading spenders
3.5.2. South Korea’s military expenditure is limited compared to leading countries worldwide
3.5.3. South Korea allocates a significant percentage of GDP towards defense
3.6. Market Opportunities: Key Trends and Growth Stimulators
3.6.1. Top 10 Defense Market Sectors by Value (US$ Million): Projections over 2019-2024
3.6.2. Missile Defense System
3.6.3. Land-based C4ISR
3.6.4. Fighters and Multirole Aircraft

4. Defense Procurement Market Dynamics
4.1. Import Market Dynamics
4.1.1. Defense imports expected to decrease over the forecast period
4.1.2. The US dominated South Korean defense imports during the historic period
4.1.3. Aircraft were the major defense imports during 2014-2018
4.2. Export Market Dynamics
4.2.1. Defense exports grew considerably during the historic period
4.2.2. Indonesia was the largest importer of South Korean defense equipment during the historic period
4.2.3. Artillery accounted for the majority of defense exports during 2014-2018

5. Industry Dynamics
5.1. Five Forces Analysis
5.1.1. Bargaining Power of Supplier: Low to Medium
5.1.2. Bargaining Power of Buyer: Medium to High
5.1.3. Barrier to Entry: Medium
5.1.4. Intensity of Rivalry: Medium
5.1.5. Threat of Substitution: High

6. Market Entry Strategy
6.1. Market Regulation
6.1.1. Offset policy aids development of domestic defense industry
6.1.2. 2018 Revision of its Defense Offset Policy:
6.1.3. FDI in the defense sector to become less complicated
6.2. Market Entry Route
6.2.1. Budgeting process
6.2.2. Procurement Policy and Process
6.2.3. Technology transfer provides good market entry opportunities
6.2.4. Research and development collaborations offer market access
6.2.5. Joint ventures and licensing agreements open new market entry strategy choices
6.3. Key Challenges
6.3.1. Industrial disputes and rigidity of labor market deter investment
6.3.2. Entrenched presence of US defense suppliers curtails market opportunities

7. Competitive Landscape and Strategic Insights
7.1. Competitive Landscape Overview
7.1.1. South Korean Market Share Analysis, 2019-2024
7.2. Key Public Sector Companies
7.2.1. Korea Aerospace Industries: Overview
7.2.2. Korea Aerospace Industries: Products and Services
7.2.3. Korea Aerospace Industries: Recent Announcements and Strategic Initiatives
7.2.4. Korea Aerospace Industries: Alliances
7.2.5. Korea Aerospace Industries: Recent Contract Wins
7.2.6. Korea Aerospace Industries: Financial Analysis
7.2.7. Hanwha Techwin America: Overview
7.2.8. Hanwha Techwin: Products
7.2.9. Hanwha Techwin America: Recent Announcements and Strategic Initiatives
7.2.10. Hanwha Techwin: Alliances
7.2.11. Hanwha Techwin: Recent Contract Wins
7.2.12. Hanwha Corporation: Overview
7.2.13. Hanwha Corporation: Products
7.2.14. Hanwha Corporation: Recent Announcements and Strategic Initiatives
7.2.15. Hanwha Corporation: Alliances
7.2.16. Hanwha Corporation: Recent Contract Wins
7.2.17. Hanwha Corporation: Financial Analysis
7.2.18. Hyundai Heavy Industries: Overview
7.2.19. Hyundai Heavy Industries: Products
7.2.20. Hyundai Heavy Industries: Recent Announcements and Strategic Initiatives
7.2.21. Hyundai Heavy Industries: Alliances
7.2.22. Hyundai Heavy Industries: Recent Contract Wins
7.2.23. Hyundai Heavy Industries: Financial Analysis
7.2.24. Daewoo Shipbuilding & Marine Engineering: Overview
7.2.25. Daewoo Shipbuilding: Products
7.2.26. Daewoo Shipbuilding & Marine Engineering (DSME): Recent Announcements and Strategic Initiatives
7.2.27. Daewoo Shipbuilding & Marine Engineering: Alliances
7.2.28. Daewoo Shipbuilding & Marine Engineering: Recent Contract Wins
7.2.29. Huneed Technologies: Overview
7.2.30. Huneed Technologies: Products and Services
7.2.31. Huneed Technologies: Recent Announcements and Strategic Initiatives
7.2.32. Huneed Technologies: Alliances
7.2.33. Huneed Technologies: Recent Contract Wins
7.2.34. STX Engine: Overview
7.2.35. STX Engine: Products and Services
7.2.36. STX Engine: Recent Announcements and Strategic Initiatives
7.2.37. STX Engine: Alliances
7.2.38. STX Engine: Recent Contract Wins
7.2.39. STX Engine: Financial Analysis
7.2.40. S&T Dynamics: Overview
7.2.41. S&T Dynamics: Products
7.2.42. S&T Dynamics: Recent Announcements and Strategic Initiatives
7.2.43. S&T Dynamics: Recent Contract Wins
7.2.44. S&T Dynamics: Financial Analysis
7.2.45. Poongsan Corporation: Overview
7.2.46. Poongsan: Products
7.2.47. Poongsan Corporation: Recent Announcements and Strategic Initiatives
7.2.48. Poongsan Corporation: Alliances
7.2.49. Poongsan Corporation: Recent Contract Wins
7.2.50. Poongsan Corporation: Financial Analysis
7.3. Key Private Sector Companies
7.3.1. Samsung Thales: Overview
7.3.2. Samsung Thales: Products and Services
7.3.3. Samsung Thales: Recent Announcements and Strategic Initiatives
7.3.4. Samsung Thales: Alliances
7.3.5. Samsung Thales: Recent Contract Wins
7.3.6. LIG NEX1: Overview
7.3.7. LIG NEX1: Products
7.3.8. LIG NEX1: Recent Announcements and Strategic Initiatives
7.3.9. LIG NEX1: Alliances
7.3.10. LIG NEX1: Recent Contract Wins
7.3.11. Doosan DST: Overview
7.3.12. Doosan DST: Products and Services
7.3.13. Doosan DST: Recent Announcements and Strategic Initiatives
7.3.14. Doosan DST: Recent Contract Wins
7.4. Key Foreign Companies
7.4.1. Lockheed Martin Korea: Overview
7.4.2. Lockheed Martin Korea: Products
7.4.3. Lockheed Martin Korea: Recent Announcements and Strategic Initiatives
7.4.4. Lockheed Martin: Alliances
7.4.5. Lockheed Martin: Recent Contract Wins
7.4.6. Lockheed Martin: Financial Analysis

8. Business Environment and Country Risk
8.1. Economic Performance
8.1.1. GDP Per Capita
8.1.2. GDP, Current Prices
8.1.3. Export of Goods and Services (LCU Billion)
8.1.4. Import of Goods and Services (LCU Billion)
8.1.5. Gross National Disposable Income (US$ Billion)
8.1.6. Local Currency Unit per US$
8.1.7. Market Capitalization of Listed Companies (US$ Billion)
8.1.8. Market Capitalization of Listed Companies (% GDP)
8.1.9. Government Cash Surplus/Deficit (% of GDP) (LCU)
8.1.10. Goods Exports (% of GDP)
8.1.11. Goods Imports (% of GDP)
8.1.12. Services Imports (% of GDP)
8.1.13. Services Exports (% of GDP)
8.1.14. Foreign Direct Investments
8.1.15. Net Foreign Direct Investments (% of GDP)
8.1.16. Mining, Manufacturing, Utilities Output

9. Appendix
9.1. About the Publisher
9.2. Disclaimer

List of Tables
Table 1: South Korean Army
Table 2: South Korean Navy
Table 3: South Korean Air Force
Table 4: South Korean Ongoing Procurement Programs
Table 5: South Korean Future Procurement Programs
Table 6: Top South Korean Defense Procurement Programs by Value (US$ Million) 2019-2024
Table 7: South Korean Defense Cooperation
Table 8: South Korean Military Training Exercises
Table 9: South Korean Defense Expenditure (KRW Trillion and US$ Billion), 2015-2024
Table 10: South Korean GDP Growth vs Defense Expenditure as a Percentage of GDP Growth, 2015-2024
Table 11: South Korean Defense Budget Split Between Capital and Revenue Expenditure (%), 2015-2024
Table 12: South Korean Defense Capital Expenditure (KRW Trillion and US$ Billion), 2015-2024
Table 13: South Korean Per Capita Defense Expenditure (US$), 2015-2024
Table 14: South Korean Homeland Security Expenditure (KRW Trillion and US$ Billion), 2015-2024
Table 15: Benchmarking with Key Markets - 2015-2019 vs 2020-2024
Table 16: Top 10 South Korea Defense Market Sectors by Value (US$ Million), 2019-2024
Table 17: Offset Regulations in South Korea
Table 18: South Korean Budget Formation Timetable
Table 19: Top Five Defense Suppliers in South Korean Defense Industry By Value (US$ Million), 2019-2024
Table 20: Competitive Landscape of the South Korean Defense Industry
Table 21: Korean Aerospace Industries - Products and Services
Table 22: Korean Aerospace Industries - Alliances
Table 23: Korean Aerospace Industries - Recent Contract Wins
Table 24: Hanwha Techwin - Products
Table 25: Hanwha Techwin - Alliances
Table 26: Hanwha Techwin - Recent Contract Wins
Table 27: Hanwha Corporation - Products
Table 28: Hanwha Corporation - Alliances
Table 29: Hanwha Corporation - Recent Contract Wins
Table 30: Hyundai Heavy Industries - Products
Table 31: Hyundai Heavy Industries - Alliances
Table 32: Hyundai Heavy Industries - Recent Contract Wins
Table 33: Daewoo Shipbuilding & Marine Engineering - Products
Table 34: Daewoo Shipbuilding & Marine Engineering - Alliances
Table 35: Daewoo Shipbuilding & Marine Engineering - Recent Contract Wins
Table 36: Huneed Technologies - Products and Services
Table 37: Huneed Technologies - Alliances
Table 38: Huneed Technologies - Recent Contract Wins
Table 39: STX Engine - Products and Services
Table 40: STX Engine - Alliances
Table 41: STX Engine - Recent Contract Wins
Table 42: S&T Dynamics - Products
Table 43: S&T Dynamics - Recent Contract Wins
Table 44: Poongsan Corporation - Products
Table 45: Poongsan Corporation - Alliances
Table 46: Poongsan Corporation - Recent Contract Wins
Table 47: Samsung Thales - Products and Services
Table 48: Samsung Thales - Alliances
Table 49: Samsung Thales - Recent Contract Wins
Table 50: LIG NEX1 - Products
Table 51: LIG NEX1 - Alliances
Table 52: LIG NEX1 - Recent Contract Wins
Table 53: Doosan DST - Products and Services
Table 54: Doosan DST - Recent Contract Wins
Table 55: Lockheed Martin Korea - Products
Table 56: Lockheed Martin - Alliances
Table 57: Lockheed Martin - Recent Contract Wins

List of Figures
Figure 1: South Korean Analysis of Defense Budget: 2020 and 2024
Figure 2: South Korean Defense Imports/Exports: 2014 and 2018
Figure 3: South Korean Top Five Prospective Procurements/Developments
Figure 4: South Korean National Security Threats
Figure 5: South Korean Partnering Countries for Defense Cooperation and Military Training
Figure 6: South Korean Defense Expenditure (KRW Trillion), 2015-2024
Figure 7: South Korean Defense Expenditure (US$ Billion), 2015-2024
Figure 8: South Korean GDP Growth vs Defense Expenditure as a Percentage of GDP Growth, 2015-2024
Figure 9:South Korean Defense Budget Split Between Capital and Revenue Expenditure (%), 2015-2024
Figure 10: South Korean Capital Budget Allocation (KRW Trillion), 2015-2024
Figure 11: South Korean Capital Budget Allocation (US$ Billion), 2015-2024
Figure 12: South Korean Per Capita Defense Expenditure (US$), 2015-2024
Figure 13: South Korean Homeland Security Expenditure (KRW Trillion), 2015-2024
Figure 14: South Korean Homeland Security Budget (US$ Billion), 2015-2024
Figure 15: Benchmarking with Key Markets - 2014-2018 vs 2019-2023
Figure 16: Defense Expenditure of the World’s Largest Military Spenders (US$ Billion), 2019 and 2024
Figure 17: Defense Expenditure as a Percentage of GDP of Largest Military Spenders (%), 2019
Figure 18: Missile Defense System (US$ Million), 2019-2024
Figure 19: Land-based C4ISR Market Size (US$ Million), 2019-2024
Figure 20: Fighters and Multirole Aircraft (US$ Million), 2019-2024
Figure 21: South Korean Defense Procurements in terms of their Supplier Relationships
Figure 22: South Korean Defense Imports Trend, 2014-2018
Figure 23: South Korean Defense Imports by Country (%), 2014-2018
Figure 24: South Korean Defense Imports by Category (%), 2014-2018
Figure 25: South Korean Defense Exports by Value, 2014-2018
Figure 26: South Korean Defense Exports by Country (US$ million), 2014-2018
Figure 27: South Korean Defense Exports by Category (%), 2014-2018
Figure 28: Industry Dynamics Porter’s Five Forces Analysis
Figure 29: South Korean Defense Off Set Policy - Revision to SME Multipliers
Figure 30: South Korean Offset Process
Figure 31: South Korean Market Challenges
Figure 32: South Korea Market Share Analysis, 2019-2024
Figure 33: Korea Aerospace Industries (KAI) - Revenue Trend Analysis (2013-2017)
Figure 34: Korea Aerospace Industries (KAI) - Operating Profit Trend Analysis (2013-2017)
Figure 35: Korea Aerospace Industries (KAI) - Net Profit Trend Analysis (2013-2017)
Figure 36: Hanwha Corporation - Revenue Trend Analysis, 2013-2017
Figure 37: Hanwha Corporation - Operating Profit Trend Analysis (2013-2017)
Figure 38: Hanwha Corporation - Net Profit Trend Analysis (2013-2017)
Figure 39: Hyundai Heavy Industries - Revenue Trend Analysis, 2013-2017
Figure 40: Hyundai Heavy Industries - Operating Profit Trend Analysis (2013-2017)
Figure 41: Hyundai Heavy Industries - Net Profit Trend Analysis (2013-2017)
Figure 42: STX Engine - Revenue Trend Analysis (2013-2017)
Figure 43: STX Engine - Operating Profit Trend Analysis (2013-2017)
Figure 44: STX Engine - Net Profit Trend Analysis (2013-2017)
Figure 45: S&T Dynamics - Revenue Trend Analysis (2013-2017)
Figure 46: S&T Dynamics - Operating Profit Trend Analysis (2013-2017)
Figure 47: S&T Dynamics - Net Profit Trend Analysis (2013-2017)
Figure 48: Poongsan Corporation - Revenue Trend Analysis (2013-2017)
Figure 49: Poongsan Corporation - Operating Profit Trend Analysis (2013-2017)
Figure 50: Poongsan Corporation - Net Profit Trend Analysis (2013-2017)
Figure 51: Lockheed Martin - Revenue Trend Analysis (US$ Billion), 2013-2017
Figure 52: Lockheed Martin - Operating Profit Trend Analysis (US$ Billion), 2013-2017
Figure 53: Lockheed Martin - Net Profit Trend Analysis (US$ Billion), 2013-2017
Figure 54: South Korean GDP Per Capita (US$/%), 2015-2025
Figure 55: South Korean GDP (Current Prices, US$ Billion), 2015-2025
Figure 56: South Korean Exports of Goods and Services (LCU Billion), 2005-2014
Figure 57: South Korean Import of Goods and Services (LCU Billion), 2005-2014
Figure 58: South Korean Gross National Disposable Income (US$ Billion/%), 2005-2013
Figure 59: South Korean LCU per US$, 2015-2024
Figure 60: South Korean Market Capitalization of Listed Companies (US$ Billion/%), 2005-2012
Figure 61: South Korean Market Capitalization of Listed Companies (% of GDP), 2005-2012
Figure 62: South Korean Government Cash Surplus/Deficit (% of GDP) (LCU), 2005-2011
Figure 63: South Korean Good Exports (% of GDP), 2005-2014
Figure 64: South Korean Good Imports (% of GDP), 2005-2014
Figure 65: South Korean Services Imports (% of GDP), 2005-2014
Figure 66: South Korean Service Exports (% of GDP), 2005-2014
Figure 67: South Korean Net Foreign Direct Investments (BoP, Current US$ Billion/%), 2005-2014
Figure 68: South Korean Net Foreign Direct Investments (% of GDP), 2005-2014
Figure 69: South Korean Mining, Manufacturing, Utilities Output (LCU Billion/%), 2005-2014
Note: Product cover images may vary from those shown
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  • Korea Aerospace Industries (KAI)
  • Hanwha Techwin
  • Hanwha Corporation
  • Hyundai Heavy Industries (HHI)
  • Daewoo Ship Building & Marine Engineering (DSME)
  • Huneed Technologies
  • STX Engine
  • S&T Dynamics
  • Poongsan Corporation
  • Samsung Thales
Note: Product cover images may vary from those shown
5 of 4
Note: Product cover images may vary from those shown
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