Brokerage : DS Investment & Securities
Analyst : Taeho Kang
Investment Rating : BUY (Maintain)
Target Price : KRW 1,250,000 (Maintain)
Core Momentum : Expanding export revenue mix overcoming short-term 2Q seasonality, with medium-to-long term high growth secured by Iraq Cheongung-II mass-production revenue recognition beginning in 2027 and expanding order pipelines across Southeast Asia and Eastern Europe
📊 1. [Valuation & Key Financial Metrics]
- Investment Rating & Target Price: Rating BUY (Maintain), Target Price KRW 1,250,000 (Maintain), Current Price KRW 702,000 (As of 2026-08-06), Upside Potential 78.1%
- Target Price Rationale & Order Backlog: Facility investments at Gimcheon and Gumi plants will begin showing full expansion benefits in 2028 to meet rising order demands; 2026 year-end backlog is projected to exceed 2025 year-end levels of KRW 26 Trillion (Order backlog at KRW 24 Trillion as of 2Q26)
- 2026 Guidance & Earnings Forecast Highlights:
- Full-year operating margin guidance raised from 7% to 8%
- 2026 estimated annual revenue of KRW 5.1 Trillion (+19.3% YoY) and operating profit of KRW 434.6 Billion (+36.1% YoY, OPM 8.5%)
- Projected 2025–2028 operating profit CAGR of 40%
- Financial Forecasts & Historicals (K-IFRS Consolidated):
- 2024: Revenue KRW 3,276 Billion, Operating Profit KRW 223 Billion (OP Margin 6.8%), Pre-tax Profit KRW 203 Billion, Controlling Net Profit KRW 219 Billion, EPS KRW 9,974 (YoY +25.4%), ROE 19.4%, PER 22.1x, PBR 4.0x, EV/EBITDA 15.5x
- 2025: Revenue KRW 4,307 Billion, Operating Profit KRW 319 Billion (OP Margin 7.4%), Pre-tax Profit KRW 278 Billion, Controlling Net Profit KRW 253 Billion, EPS KRW 11,516 (YoY +15.5%), ROE 19.2%, PER 36.6x, PBR 6.5x, EV/EBITDA 22.9x
- 2026F: Revenue KRW 5,138 Billion, Operating Profit KRW 435 Billion (OP Margin 8.5%), Pre-tax Profit KRW 461 Billion, Controlling Net Profit KRW 373 Billion, EPS KRW 17,072 (YoY +48.2%), ROE 23.6%, PER 41.1x, PBR 8.9x, EV/EBITDA 28.9x
- 2027F: Revenue KRW 6,187 Billion, Operating Profit KRW 666 Billion (OP Margin 10.8%), Pre-tax Profit KRW 689 Billion, Controlling Net Profit KRW 567 Billion, EPS KRW 25,968 (YoY +52.1%), ROE 28.6%, PER 27.0x, PBR 6.9x, EV/EBITDA 20.2x
- 2028F: Revenue KRW 7,288 Billion, Operating Profit KRW 866 Billion (OP Margin 11.9%), Pre-tax Profit KRW 891 Billion, Controlling Net Profit KRW 734 Billion, EPS KRW 33,599 (YoY +29.4%), ROE 28.5%, PER 20.9x, PBR 5.3x, EV/EBITDA 15.6x
- Stock Indicators: KOSPI 6,296.4pt, Market Cap KRW 15,444 Billion, Outstanding Shares 22,000 Thousand shares, Par Value KRW 5,000, Capital Stock KRW 110 Billion, 60-Day Avg Daily Trading Volume 220 Thousand shares, 60-Day Avg Daily Trading Value KRW 179,723 Million, Foreign Ownership 26.6%, 52-Week High/Low KRW 1,118,000 / KRW 360,000, Major Shareholders LIG & 9 affiliated parties (38.2%), National Pension Service & 1 affiliated party (10.3%)
🚀 2. [Market Opportunities & Business Outlook]
- 2Q26 Earnings Review:
- Consolidated revenue reached KRW 1.1 Trillion (+17.4% YoY) and operating profit came in at KRW 105.7 Billion (+29.5% YoY, OPM 9.5%), missing consensus estimates (KRW 1.17 Trillion revenue, KRW 111.0 Billion operating profit) by roughly 5%.
- Earnings miss was driven by normalization of UAE Cheongung deliveries (KRW 99 Billion) following early deliveries in 1Q26, alongside operating losses from Ghost Robotics (KRW 12.2 Billion).
- However, total export portion expanded by +8%p YoY to 25.4%, and operating margin improved by +0.9%p YoY supported by low-20% export profitability.
- 2H26 & Medium-to-Long Term Outlook:
- 2H26 operating profit is projected to expand by +23.1% YoY, backed by approximately KRW 240 Billion in UAE Cheongung-II deliveries and Poniard (Bigung) export growth.
- Iraq Cheongung-II mass-production revenue recognition beginning in 2027 is expected to drive a 2025–2028 operating profit CAGR of 40%.
- Order Pipeline & Potential Deals:
- Active order negotiations underway with multiple customers across Southeast Asia (Philippines, etc.) and Eastern Europe, offering room for higher export backlog contributions (currently 57% of total backlog).
- High probability of securing additional Middle Eastern Cheongung-II export contracts within the year.
📝 Editor’s Comment (Perspective)
The covering analyst views LIG D&A not as a defense contractor vulnerable to quarterly revenue timing or subsidiary expenses, but as a tier-1 defense exporter entering a multi-year compounding growth cycle driven by global air defense demand and scheduled mass deliveries of its secured Middle East backlog. This perspective places greater emphasis on long-term capacity additions at Gimcheon and Gumi plants and high-margin export deliveries driven by Iraq Cheongung-II mass-production revenue recognition beginning in 2027 than on seasonal quarterly earnings variations.
To verify whether this investment thesis continues to materialize, primary focus should be directed toward the delivery pace of UAE Cheongung-II and Poniard exports in 2H26, the formal signing of new export contracts across the Middle East, Southeast Asia (Philippines), and Eastern Europe, and the execution of Iraq Cheongung-II mass-production recognition beginning in 2027. These operational milestones can be monitored through upcoming quarterly earnings releases, corporate IR disclosures, contract award filings, and periodic financial reports.
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