Brokerage : Yuanta Securities
Analyst : Jongmin Baik
Investment Rating : BUY (Maintain)
Target Price : KRW 690,000 (Maintain)
Core Momentum : Short-term earnings miss from one-off provisions and impairments cleared in 4Q25, with potential to beat conservative 2026 guidance supported by a KRW 26.2T backlog and expanding defense programs
1. [Valuation & Key Financial Metrics]
- Investment Rating & Target Price: Rating BUY (Maintain), Target Price KRW 690,000 (Maintain), Previous Target Price KRW 690,000, Current Price KRW 460,000 (As of February 13, 2026), Upside Potential 50%
- 2026 Company Guidance: Management guidance calls for Revenue growth of +15% YoY and an OPM level of ~7% (earnings likely to exceed guidance driven by Ghost Robotics reaching BEP and the completion of lower-margin Indonesian projects)
- Financial Forecasts & Historicals (K-IFRS Consolidated):
- 2023A: Revenue KRW 2,309 Billion, Operating Profit KRW 186 Billion, Controlling Net Profit KRW 175 Billion, PER 10.6x, PBR 1.7x, EV/EBITDA 6.6x, ROE 17.6%
- 2024A: Revenue KRW 3,276 Billion, Operating Profit KRW 230 Billion, Controlling Net Profit KRW 222 Billion, PER 18.4x, PBR 3.3x, EV/EBITDA 13.0x, ROE 19.6%
- 2025P: Revenue KRW 4,307 Billion, Operating Profit KRW 323 Billion, Controlling Net Profit KRW 277 Billion, PER 33.4x, PBR 6.5x, EV/EBITDA 22.4x, ROE 21.1%
- 2026F: Revenue KRW 4,740 Billion, Operating Profit KRW 436 Billion, Controlling Net Profit KRW 360 Billion, PER 28.1x, PBR 6.0x, EV/EBITDA 18.8x, ROE 23.2%
- Stock Metrics: Market Cap KRW 10,120.0 Billion, Outstanding Shares 22,000,000 shares, 60-Day Avg Daily Trading Value KRW 65.6 Billion, 60-Day Avg Daily Volume 143,404 shares, 52-Week High/Low KRW 631,000 / KRW 239,000, Foreign Ownership 28.77%, Dividend Yield 1.09%, Major Shareholders LIG & 8 affiliated parties
2. [Market Opportunities & Business Outlook]
- 4Q25 Earnings Review:
- Consolidated revenue reached KRW 1,404.8 Billion (+20.3% YoY) and operating profit recorded KRW 42.1 Billion (-31.7% YoY, OPM 3.0%), missing consensus (KRW 70.0 Billion) by -40.2%.
- Margin Contraction Drivers: ① Recognition of lower-margin Indonesian export projects (~KRW 98.0 Billion at BEP level), ② Product mix deterioration from higher domestic R&D revenue share (28.0% in 4Q25P vs 22.9% in 2025P), ③ One-off loss provisions of ~KRW 50.0 Billion on new project intakes, and ④ Ghost Robotics operating losses of ~KRW 9.6 Billion (standalone OPM stood at 7.2% excluding one-offs).
- Non-Operating Items: Pre-tax balance turned negative YoY due to one-off impairment losses of ~KRW 140.0 Billion recognized on Ghost Robotics’ intangible assets and goodwill.
- Order Backlog & Medium-to-Long-term Catalysts:
- Order backlog at year-end 2025 reached KRW 26.2 Trillion (export share 54.9%, up from KRW 23.4 Trillion in 2024), supported by Middle East Cheongung-II, domestic L-SAM, electronic warfare systems, and other Cheongung-II-related orders.
- Domestic mass production for L-SAM commenced late last year, while global interest is surging for precision guided munitions including Bigung (Poniard) and Hyungung (Raybolt).
- Favorable macro environment sustained by anticipated US defense budget increases and broadening domestic defense system development programs.
Editor’s Comment (Perspective)
The covering analyst views LIG D&A not as an enterprise constrained by temporary 4Q R&D loss provisions (KRW 50 Billion) or one-off Ghost Robotics impairments (KRW 140 Billion), but as a core defense contractor poised for multi-year earnings expansion anchored by a massive KRW 26.2 Trillion backlog (54.9% export mix). This perspective emphasizes that conservative management guidance (OPM ~7%) leaves substantial room for positive surprise as low-margin Indonesian contracts phase out, Ghost Robotics targets BEP (recovering from a KRW 42.0B loss in 2025), and domestic L-SAM production progresses while global interest expands for Poniard and Raybolt.
To verify whether this investment thesis continues to materialize, primary focus should be directed toward full-year 2026 margin expansion exceeding conservative guidance, the completion and normalization of low-margin export contracts, operational turnaround at Ghost Robotics toward BEP, and contract conversion milestones for Saudi Arabia/Iraq Cheongung-II deliveries and Poniard/Raybolt exports. These operational milestones can be monitored through upcoming quarterly earnings releases, corporate IR disclosures, contract award filings, and official periodic reports.
📢 Disclaimer & Source
Source: This content has been structured and newly written based on officially disclosed financial facts and data from brokerage reports.
Investment Risk Notice: This content is provided for informational and linguistic reference purposes only. Under no circumstances does it constitute financial advice or a recommendation to buy or sell any specific securities. All investment decisions and financial responsibilities rest entirely with the investor.
Contact: Compliance and Copyright Inquiries (ksb220805@gmail.com)
