Brokerage : Eugene Investment & Securities
Analyst : Seungyun Yang
Investment Rating : BUY (Maintain)
Target Price : KRW 1,200,000 (Maintain)
Core Momentum : Multi-year earnings and margin expansion driven by Cheongung-II exports, production capacity additions across Gumi and Gimcheon facilities, and projected 40% operating profit CAGR over 2027-2028
1. [Valuation & Key Financial Metrics]
- Investment Rating & Target Price: Rating BUY (Maintain), Target Price KRW 1,200,000 (Maintain), Current Price KRW 702,000 (As of 2026-08-06)
- Guidance & Forecast Revisions:
- Raised full-year corporate OPM guidance from 7% to 8% (annual revenue CAGR target of 15%)
- 2026E operating profit revised upward to KRW 428 Billion (from KRW 421 Billion); 2027E operating profit maintained at KRW 596 Billion
- Financial Forecasts & Historicals:
- 2025A: Revenue KRW 4,307 Billion, Operating Profit KRW 319 Billion, Pre-tax Profit KRW 278 Billion, Net Profit KRW 237 Billion, EPS KRW 11,516 (Growth +15.5%), PER 36.6x, ROE 19.2%, PBR 6.5x, EV/EBITDA 22.9x
- 2026E: Revenue KRW 4,992 Billion, Operating Profit KRW 428 Billion, Pre-tax Profit KRW 409 Billion, Net Profit KRW 322 Billion, EPS KRW 15,278 (Growth +32.7%), PER 45.9x, ROE 21.5%, PBR 9.1x, EV/EBITDA 28.3x
- 2027E: Revenue KRW 6,023 Billion, Operating Profit KRW 596 Billion, Pre-tax Profit KRW 558 Billion, Net Profit KRW 475 Billion, EPS KRW 22,690 (Growth +48.5%), PER 30.9x, ROE 25.9%, PBR 7.2x, EV/EBITDA 21.3x
- Stock Metrics: Market Cap KRW 15,444 Billion, Outstanding Shares 22,000 Thousand shares, 52-Week High/Low KRW 1,118,000 / KRW 360,000, 52-Week Daily Beta -0.25, 60-Day Avg Daily Trading Value KRW 179.7 Billion, Foreign Ownership 26.7%, Dividend Yield (2026E) 0.4%, 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 1,110.1 Billion (+17.4% YoY, -4.9% QoQ) and operating profit recorded KRW 105.7 Billion (+29.5% YoY, -38.2% QoQ, OPM 9.5%), broadly meeting consensus (KRW 110.5 Billion operating profit).
- Profitability improved YoY backed by an expanding export mix, operating leverage, and the absence of one-off losses.
- 2Q export sales reached KRW 281.8 Billion (+71.1% YoY, 25.4% of total revenue) with UAE Cheongung-II revenue contributing ~KRW 99 Billion. Export margins are estimated in the mid-20% range.
- UAE shipments are anticipated to re-expand in Q3 and Q4.
- Order Backlog & Regional Pipeline Expansion:
- Order backlog stood at KRW 24.6 Trillion at the end of 2Q26 (+KRW 1.1 Trillion YoY).
- In the Middle East, initial adoptions are stimulating demand across neighboring nations; Southeast Asian defense procurement interest is rising (with potential for faster contract execution than Middle Eastern follow-ons); and European outreach continues alongside Rheinmetall partnerships to penetrate NATO-centric procurement channels.
- Manufacturing CapEx Expansion:
- Expanding production and R&D capacity to fulfill contracts across three Middle Eastern customer nations, including new construction at the Gumi site and expansion of the Gimcheon facility (full revenue contribution expected post-2028).
- 2027–2028 operating profit CAGR projected at 40%.
Editor’s Comment (Perspective)
The covering analyst views LIG D&A not as a company bounded by quarterly delivery base effects, but as an advancing defense exporter entering a compounding growth trajectory driven by global air defense demand spillovers and scheduled production across three Middle Eastern customer nations. This perspective places primary importance on the raised full-year OPM guidance, facility expansions across Gumi and Gimcheon securing long-term execution post-2028, and a projected 40% operating profit CAGR across 2027–2028 over near-term quarterly delivery variations.
To verify whether this investment thesis continues to materialize, primary focus should be directed toward the sequential rebound of UAE Cheongung-II deliveries in 3Q–4Q26, new contract awards across Southeast Asia and Eastern Europe (via the Rheinmetall partnership), and the operational progress of Gumi and Gimcheon facility expansions sustaining the 40% operating profit CAGR across 2027–2028. These milestones can be tracked via upcoming quarterly earnings releases, corporate IR disclosures, contract award filings, and official periodic reports.
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