Brokerage : Hanwha Investment & Securities
Analyst : Seongjo Bae, RA Now Kim
Investment Rating : Buy (Maintain)
Target Price : KRW 740,000 (Maintain)
Core Momentum : 3Q25 earnings beat driven by domestic production leverage, supported by a KRW 23.4T order backlog and accelerating export recognition (Iraq exports and Cheongung-II)
1. [Valuation & Key Financial Metrics]
- Investment Rating & Target Price: Rating Buy (Maintain), Target Price KRW 740,000 (Maintain), Current Price KRW 481,000 (As of November 6, 2025), Upside Potential 53.8%
- Valuation Attractiveness: Trading at an attractive 2027E P/E multiple of 19.5x based on internal estimates
- Financial Forecasts & Historicals:
- 2024: Revenue KRW 3,276 Billion, Operating Profit KRW 230 Billion, EBITDA KRW 309 Billion, Controlling Net Profit KRW 222 Billion, EPS KRW 10,078, Net Debt KRW -84 Billion, PER 21.9x, PBR 4.0x, EV/EBITDA 15.4x, Dividend Yield 1.1%, ROE 19.6%
- 2025E: Revenue KRW 4,205 Billion, Operating Profit KRW 349 Billion, EBITDA KRW 540 Billion, Controlling Net Profit KRW 312 Billion, EPS KRW 14,278, Net Debt KRW 115 Billion, PER 33.7x, PBR 7.2x, EV/EBITDA 19.8x, Dividend Yield 0.6%, ROE 23.2%
- 2026E: Revenue KRW 4,841 Billion, Operating Profit KRW 434 Billion, EBITDA KRW 721 Billion, Controlling Net Profit KRW 398 Billion, EPS KRW 18,227, Net Debt KRW -31 Billion, PER 26.4x, PBR 5.8x, EV/EBITDA 14.6x, Dividend Yield 0.6%, ROE 24.2%
- 2027E: Revenue KRW 5,678 Billion, Operating Profit KRW 594 Billion, EBITDA KRW 887 Billion, Controlling Net Profit KRW 539 Billion, EPS KRW 24,658, Net Debt KRW -139 Billion, PER 19.5x, PBR 4.6x, EV/EBITDA 11.8x, Dividend Yield 0.7%, ROE 26.3%
- Stock Metrics: Market Cap KRW 10,582.0 Billion, Outstanding Shares 22,000 Thousand shares, 52-Week High/Low KRW 631,000 / KRW 171,100, 90-Day Avg Daily Trading Value KRW 90.49 Billion, Foreign Ownership 30.0%, Major Shareholders LIG & 8 affiliated parties (38.2%), National Pension Service (10.0%), Artisan Partners Limited Partners (8.2%)
2. [Market Opportunities & Business Outlook]
- 3Q25 Earnings Review:
- Consolidated revenue reached KRW 1,049.2 Billion (+41.7% YoY) and operating profit recorded KRW 89.6 Billion (+72.5% YoY, OPM 8.5%), beating market consensus by ~16%.
- Outperformance Drivers: Operating leverage from expanded domestic mass-production batches, strong export profitability (~20% OPM), and the deferral of scheduled 3Q R&D expenses into 4Q and early next year.
- Subsidiary Performance: Ghost Robotics posted an estimated operating loss of ~KRW 12.0 Billion in 3Q (1Q KRW 4.0B, 2Q KRW 14.0B), with quarterly losses expected to hover around KRW 10.0 Billion in the near term.
- Segment Breakdown & Full-Year Guidance:
- Domestic Business: Revenue reached KRW 883.2 Billion (+49.6% YoY) with mass production accounting for ~77% (operating margin ~8%, while R&D recorded a minor loss due to provisions).
- Export Business: Revenue recorded KRW 166.0 Billion (+10.8% YoY, 15.8% of total revenue) with UAE Cheongung-II contributing KRW 83.0 Billion (1Q KRW 65.0B, 2Q KRW 73.0B). Real export proportion reached ~18% including domestic-classified export deliveries.
- Guidance Visibility: Even assuming additional R&D cost recognition in 4Q (projected 4Q OPM of 5.3%), full-year OPM guidance of 8% remains fully achievable.
- Order Backlog & Long-Term Expansion:
- Total order backlog stands at KRW 23.4 Trillion, with exports accounting for approximately 60%.
- Export revenue share (currently under 20% annually) is projected to increase structurally to 24% in 2026 and 29% in 2027.
- Meaningful expansion in export mix (>20% of revenue) is expected from 4Q, driven by Iraq exports and accelerated revenue recognition for Cheongung-II.
Editor’s Comment (Perspective)
The covering analyst views LIG D&A not as an enterprise constrained by R&D expense deferrals or ongoing near-term quarterly losses at Ghost Robotics, but as a premier defense prime methodically converting its KRW 23.4 Trillion backlog (~60% export mix) into sustained operating growth. This perspective emphasizes the strong visibility of meeting the full-year 8% OPM guidance, the upcoming inflection in 4Q export deliveries (Iraq exports and accelerated Cheongung-II revenue recognition), and the sequential expansion of export revenue share toward 29% by 2027.
To verify whether this investment thesis continues to materialize, primary focus should be directed toward securing the full-year 8% OPM target despite 4Q R&D cost recognition, lifting 4Q export mix above 20% through accelerated Cheongung-II execution and Iraq exports, and maintaining the multi-year export expansion trajectory (targeting 29% by 2027). 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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