Brokerage : Kiwoom Securities
Analyst : Hangyeol Lee
Investment Rating : BUY (Maintain)
Target Price : KRW 700,000 (Upward)
Core Momentum : Overcoming 4Q25 one-off provisions, supported by the acceleration of UAE Cheongung-II mass-production exports and potential profitability turnaround at Ghost Robotics
1. [Valuation & Key Financial Metrics]
- Investment Rating & Target Price: Rating BUY (Maintain), Target Price KRW 700,000 (Raised from previous target), Current Price KRW 460,000 (As of February 13, 2026), Market Cap KRW 10,120.0 Billion
- Valuation Methodology: Target price raised to KRW 700,000 by applying a Target P/E multiple of 30x (peer average) to the 2027 estimated EPS of KRW 23,385
- 2026 Full-Year Forecasts: Revenue projected at KRW 5,035.6 Billion (+16.9% YoY) and Operating Profit at KRW 421.3 Billion (+30.5% YoY, OPM 8.4%), with export revenue reaching KRW 1.2 Trillion (+30.5% YoY, export mix expanding by 2.5%p to 23.9%)
- Financial Forecasts & Historicals (IFRS Consolidated):
- 2023: Revenue KRW 2,308.6 Billion, Operating Profit KRW 186.4 Billion (OP Margin 8.1%), EBITDA KRW 255.2 Billion, Pre-tax Profit KRW 185.0 Billion, Net Profit KRW 175.0 Billion, Controlling Net Profit KRW 175.0 Billion, EPS KRW 7,953 (Growth +42.3%), PER 16.4x, PBR 2.73x, EV/EBITDA 10.6x, ROE 17.6%, Net Debt Ratio -16.2%
- 2024: Revenue KRW 3,276.3 Billion, Operating Profit KRW 229.8 Billion (OP Margin 7.0%), EBITDA KRW 309.1 Billion, Pre-tax Profit KRW 209.6 Billion, Net Profit KRW 216.6 Billion, Controlling Net Profit KRW 221.7 Billion, EPS KRW 10,078 (Growth +26.7%), PER 21.9x, PBR 4.01x, EV/EBITDA 15.5x, ROE 19.6%, Net Debt Ratio -7.2%
- 2025F: Revenue KRW 4,306.9 Billion, Operating Profit KRW 322.9 Billion (OP Margin 7.5%), EBITDA KRW 411.8 Billion, Pre-tax Profit KRW 222.7 Billion, Net Profit KRW 211.6 Billion, Controlling Net Profit KRW 255.2 Billion, EPS KRW 11,600 (Growth +15.1%), PER 39.7x, PBR 7.25x, EV/EBITDA 22.6x, ROE 19.6%, Net Debt Ratio 3.9%
- 2026F: Revenue KRW 5,035.6 Billion, Operating Profit KRW 421.3 Billion (OP Margin 8.4%), EBITDA KRW 512.0 Billion, Pre-tax Profit KRW 420.4 Billion, Net Profit KRW 334.2 Billion, Controlling Net Profit KRW 364.3 Billion, EPS KRW 16,560 (Growth +42.8%), PER 27.8x, PBR 5.98x, EV/EBITDA 19.8x, ROE 23.6%, Net Debt Ratio 2.7%
- Stock Metrics: KOSPI 5,507.01pt, Outstanding Shares 22,000 Thousand shares, 3-Month Avg Daily Volume 143 Thousand shares, Foreign Ownership 28.8%, Dividend Yield (2025E) 0.6%, BPS (2025E) KRW 63,467, Major Shareholders LIG & 8 affiliated parties (38.2%)
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 (-31.8% YoY, OPM 3.0%), missing consensus (KRW 70.5 Billion) and internal forecasts (KRW 73.6 Billion).
- Margin Contraction Drivers: Higher domestic R&D revenue mix, recognition of a lower-margin overseas project (KRW 98.0 Billion), Ghost Robotics operating loss (~KRW 9.6 Billion), and one-off loss provisions of ~KRW 50.0 Billion on new project intakes (normalized OPM stood at 6.6% excluding one-offs).
- Order Intake & Growing Backlog:
- 4Q new order intake booked at ~KRW 4.16 Trillion (including domestic L-SAM production, M-SAM III system development, and electronic warfare system development).
- Total backlog reached KRW 26.2 Trillion at year-end 2025 (+31% YoY vs. 2024).
- Export Expansion & Ghost Robotics (GR) Turnaround:
- Full-scale mass-production deliveries of UAE Cheongung-II begin in 2026, with export revenue projected to reach KRW 1.2 Trillion (+30.5% YoY). Export revenue share expected to expand toward 30% after 2027 as Saudi Arabia and Iraq programs enter delivery.
- Ghost Robotics posted 2025 revenue of KRW 16.0 Billion and an operating loss of KRW 43.0 Billion; secured contracts for over 100 Vision 60 units with an international client at year-end 2025, with a potential turnaround to profitability depending on additional contract wins during 2026.
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 provisions (KRW 50 Billion) or project mix, but as a premier defense prime entering a full-scale export expansion cycle anchored by a KRW 26.2 Trillion order backlog. This perspective emphasizes the underlying earnings strength (normalized 6.6% OPM in 4Q25), projected 2026 export revenue of KRW 1.2 Trillion (expanding to ~30% mix post-2027), and the potential profitability turnaround at Ghost Robotics as primary catalysts justifying the target price increase to KRW 700,000.
To verify whether this investment thesis continues to materialize, primary focus should be directed toward scheduled UAE Cheongung-II mass-production deliveries achieving KRW 1.2 Trillion in export sales for 2026, additional international contract awards and profitability turnaround at Ghost Robotics, and steady milestone execution across the KRW 4.16 Trillion 4Q order additions (L-SAM, M-SAM III, electronic warfare). 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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