Brokerage : Hana Securities
Analyst : Woonsam Chae
Investment Rating : BUY (Maintain)
Target Price : KRW 1,110,000 (Maintain)
Core Momentum : Strong 1Q26 earnings beat driven by high-margin UAE Cheongung-II follow-on services and early deliveries, underpinned by a KRW 25.3T backlog ensuring 5.9 years of forward revenue
1. [Valuation & Key Financial Metrics]
- Investment Rating & Target Price: Rating BUY (Maintain), 12-Month Target Price KRW 1,110,000 (Maintain), Current Price KRW 866,000 (As of May 7, 2026)
- Valuation & Order Backlog: Secured order backlog of ~KRW 25.3 Trillion as of 1Q26 (5.9 years of revenue visibility); current share price trades at 2027E P/E of 35.7x and 2028E P/E of 24.8x
- Financial Forecasts & Historicals:
- 2024: Revenue KRW 3,276.3 Billion, Operating Profit KRW 223.4 Billion, Pre-tax Profit KRW 203.2 Billion, Net Profit KRW 219.4 Billion, EPS KRW 9,974 (Growth +25.41%), PER 22.11x, PBR 3.99x, EV/EBITDA 15.63x, ROE 19.40%, BPS KRW 55,211, DPS KRW 2,400
- 2025: Revenue KRW 4,306.9 Billion, Operating Profit KRW 319.4 Billion, Pre-tax Profit KRW 278.4 Billion, Net Profit KRW 253.4 Billion, EPS KRW 11,516 (Growth +15.46%), PER 36.56x, PBR 6.46x, EV/EBITDA 23.00x, ROE 19.20%, BPS KRW 65,186, DPS KRW 2,950
- 2026F: Revenue KRW 4,996.0 Billion, Operating Profit KRW 430.0 Billion, Pre-tax Profit KRW 418.0 Billion, Net Profit KRW 351.2 Billion, EPS KRW 15,963 (Growth +38.62%), PER 54.25x, PBR 11.07x, EV/EBITDA 37.13x, ROE 22.32%, BPS KRW 78,220, DPS KRW 3,974
- 2027F: Revenue KRW 5,819.6 Billion, Operating Profit KRW 621.6 Billion, Pre-tax Profit KRW 616.4 Billion, Net Profit KRW 533.3 Billion, EPS KRW 24,239 (Growth +51.84%), PER 35.73x, PBR 8.79x, EV/EBITDA 27.45x, ROE 27.49%, BPS KRW 98,513, DPS KRW 6,050
- Consensus Estimates: 2026 Revenue KRW 5,048.0 Billion / Operating Profit KRW 443.1 Billion / Net Profit KRW 352.8 Billion / EPS KRW 16,765; 2027 Revenue KRW 6,029.7 Billion / Operating Profit KRW 606.5 Billion / Net Profit KRW 490.9 Billion / EPS KRW 23,142
- Stock Metrics: KOSPI 7,490.05pt, 52-Week High/Low KRW 1,020,000 / KRW 336,500, Market Cap KRW 19,052.0 Billion, Market Cap Weight 0.31%, Outstanding Shares 22,000.0 Thousand shares, 60-Day Avg Daily Volume 472.2 Thousand shares, 60-Day Avg Daily Trading Value KRW 366.7 Billion, Foreign Ownership 23.18%, Major Shareholders LIG & 8 affiliated parties (38.21%), National Pension Service (9.67%)
2. [Market Opportunities & Business Outlook]
- 1Q26 Earnings Review:
- Consolidated revenue reached KRW 1.2 Trillion (+28.7% YoY) and operating profit recorded KRW 171.1 Billion (+50.6% YoY, OPM 14.8%), beating market consensus.
- Domestic revenue stood at KRW 0.8 Trillion (+2.1% YoY; R&D KRW 0.2 Trillion, Production KRW 0.6 Trillion), while export sales surged to KRW 0.4 Trillion (+150.1% YoY).
- UAE Cheongung-II revenue reached ~KRW 170.0 Billion (vs. ~KRW 120.0 Billion in 4Q25), boosted by high-margin follow-on support services (maintenance/spare parts) and early missile deliveries in March.
- Earnings beat materialized despite Ghost Robotics operating losses of ~KRW 13.0 Billion, supported by an expanding export mix.
- 2Q26 Earnings Outlook:
- 2Q operating profit is projected at KRW 96.2 Billion (+24.0% YoY, OPM 9.1%).
- Sequential margin normalization is attributed to the reduced portion of high-margin follow-on service revenues and the non-recurrence of March early delivery effects.
- Market Drivers & Sentiment Factors:
- Post-earnings share price decline of 11.5% reflected ceasefire concerns in the Middle East, multiple compression, and the absence of guidance upgrades.
- Global PAC-3 interceptor shortages remain difficult to resolve in the short term regardless of potential ceasefires, sustaining long-term export prospects and valuation re-rating potential for Cheongung-II.
Editor’s Comment (Perspective)
The covering analyst views LIG D&A not as an enterprise constrained by post-earnings share price corrections or unadjusted annual guidance, but as a premier global defense contractor whose medium-to-long-term growth trajectory is securely backed by acute interceptor shortages and a massive KRW 25.3 Trillion order backlog. This perspective emphasizes the demonstrated high margin profile from follow-on support services and the potential for a substantial backlog re-rating upon new export deals over short-term geopolitical sentiment swings.
To verify whether this investment thesis continues to materialize, primary focus should be directed toward the delivery normalization of UAE Cheongung-II achieving the projected 2Q operating profit of KRW 96.2 Billion, the execution of new international contract awards amid ongoing interceptor shortages, and the annual revenue conversion rate of the KRW 25.3 Trillion order backlog. 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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