Brokerage : Shinhan Securities
Analyst : Dong-heon Lee, Jihan Lee
Investment Rating : BUY (Maintain)
Target Price : KRW 550,000 (Downward)
Core Momentum : Temporary pause from 4Q25 one-offs and KRW 140B impairments overshadowed by robust medium-to-long-term growth anchored by KRW 10.3T in annual new orders and a KRW 26.2T backlog
1. [Valuation & Key Financial Metrics]
- Investment Rating & Target Price: Rating BUY (Maintain), Target Price KRW 550,000 (Adjusted by -2% from KRW 560,000), Current Price KRW 463,000 (As of February 19, 2026), Upside Potential 18.8%
- Valuation Methodology: Target price derived by applying a 90% premium (raised from 50%) to the 2022-2024 peer group average P/E against the 2026-2027 estimated average EPS of KRW 16,141 (lowered by -23% from KRW 20,836)
- Financial Forecasts & Historicals:
- 2023: Revenue KRW 2,308.6 Billion, Operating Profit KRW 186.4 Billion, Controlling Net Profit KRW 175.0 Billion, PER 16.4x, ROE 17.6%, PBR 2.7x, EV/EBITDA 10.6x, DY 1.5%
- 2024: Revenue KRW 3,276.3 Billion, Operating Profit KRW 229.8 Billion, Controlling Net Profit KRW 221.7 Billion, PER 21.9x, ROE 19.6%, PBR 4.0x, EV/EBITDA 15.5x, DY 1.1%
- 2025F: Revenue KRW 4,216.8 Billion, Operating Profit KRW 375.4 Billion, Controlling Net Profit KRW 329.3 Billion, PER 28.1x, ROE 25.1%, PBR 6.6x, EV/EBITDA 18.9x, DY 0.8%
- 2026F: Revenue KRW 4,966.3 Billion, Operating Profit KRW 471.4 Billion, Controlling Net Profit KRW 425.8 Billion, PER 23.6x, ROE 27.0%, PBR 5.8x, EV/EBITDA 16.3x, DY 1.0%
- 2027F: Revenue KRW 5,668.9 Billion, Operating Profit KRW 561.0 Billion, Controlling Net Profit KRW 491.0 Billion, PER 20.5x, ROE 25.5%, PBR 4.8x, EV/EBITDA 13.5x, DY 1.1%
- Stock Metrics: Market Cap KRW 10,142.0 Billion, Outstanding Shares 22.0 Million shares (Floating Ratio 60.9%), 52-Week High/Low KRW 631,000 / KRW 239,000, 60-Day Avg Daily Trading Value KRW 66,640 Million, Foreign Ownership 28.9%, Major Shareholders LIG & 8 affiliated parties (38.2%), National Pension Service (8.7%)
2. [Market Opportunities & Business Outlook]
- 4Q25 Earnings Review:
- Consolidated revenue reached KRW 1,404.8 Billion (+20% YoY) and operating profit recorded KRW 42.1 Billion (-24% YoY, OPM 3.0%).
- Revenue beat consensus by +14%, while operating profit missed consensus (KRW 70.6 Billion) by -40%.
- Decline Factors: Increased R&D expenses, recognition of lower-margin export projects, operating losses from Ghost Robotics, and non-operating impairment losses of ~KRW 140.0 Billion on Ghost Robotics’ intangible assets and goodwill.
- Order Book Expansion & Segment Details:
- 4Q new orders booked at KRW 4.2 Trillion; full-year 2025 new orders reached KRW 10.3 Trillion (2.3x annual revenue).
- Total order backlog surged to KRW 26.2 Trillion (+31% YoY, up KRW 6.0 Trillion in one year).
- Backlog Composition: Middle East Cheongung-II reached KRW 10.2 Trillion (+55%) and domestic R&D backlog reached KRW 5.3 Trillion (+133%), driving the bulk of order growth.
- Long-Term Growth Drivers:
- While R&D contracts impose short-term cost burdens, Cheongung-II revenue recognition provides long-term top-line and margin expansion.
- Expanding export opportunities for L-SAM (high-altitude missile defense system) and other defense systems.
- Solid long-term investment case reinforced by commercialization of robotics and expanding defense exports amid heightened geopolitical tensions.
Editor’s Comment (Perspective)
The covering analyst views LIG D&A not through the lens of short-term 4Q margin dilution caused by R&D cost burdens and one-off Ghost Robotics impairments (KRW 140 Billion), but as an exceptional long-term defense asset backed by an expanding KRW 26.2 Trillion backlog. This perspective prioritizes the strong annual order intake of KRW 10.3 Trillion (2.3x revenue), sequential revenue conversion from the KRW 10.2 Trillion Middle East Cheongung-II backlog, and long-term export expansion into systems like L-SAM over temporary quarterly earnings softness.
To verify whether this investment thesis continues to materialize, primary focus should be directed toward the revenue recognition pace of the KRW 10.2 Trillion Middle East Cheongung-II backlog, operational normalization and turnaround in the robotics business following impairment clearing, and contract execution milestones for L-SAM and other defense-system exports. These operational milestones can be monitored through upcoming quarterly earnings releases, corporate IR disclosures, contract award filings, and official periodic reports.
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