Brokerage : iM Securities
Analyst : Yongjin Byun
Investment Rating : Buy (Maintain)
Target Price : KRW 1,230,000 (Maintain)
Core Momentum : Full-year OPM guidance raised to 8% overcoming 2Q base effects, supported by a KRW 24.6T order backlog, global pipeline expansion, and aggressive CapEx/R&D investments
1. [Valuation & Key Financial Metrics]
- Investment Rating & Target Price: Rating Buy (Maintain), 12-Month Target Price KRW 1,230,000 (Maintain), Closing Price KRW 702,000 (As of 2026-08-06), Upside Potential 75.2%
- Guidance & Forecast Revisions: Upward revision of annual corporate OPM guidance from 7% to 8% (iM Securities forecasts full-year OPM at 9.4%)
- Financial Forecasts & Historicals (K-IFRS Consolidated):
- 2023: Revenue KRW 4,307 Billion, Operating Profit KRW 319 Billion, Net Profit KRW 253 Billion, EPS KRW 11,516, BPS KRW 65,005, PER 36.6x, PBR 6.5x, ROE 19.2%, Dividend Yield 0.7%, EV/EBITDA 22.5x
- 2024E: Revenue KRW 5,052 Billion, Operating Profit KRW 476 Billion, Net Profit KRW 359 Billion, EPS KRW 16,341, BPS KRW 78,122, PER 43.0x, PBR 9.0x, ROE 22.8%, Dividend Yield 0.4%, EV/EBITDA 24.8x
- 2025E: Revenue KRW 6,037 Billion, Operating Profit KRW 589 Billion, Net Profit KRW 447 Billion, EPS KRW 20,298, BPS KRW 95,197, PER 34.6x, PBR 7.4x, ROE 23.4%, Dividend Yield 0.4%, EV/EBITDA 21.3x
- 2026E: Revenue KRW 6,572 Billion, Operating Profit KRW 716 Billion, Net Profit KRW 549 Billion, EPS KRW 24,968, BPS KRW 116,942, PER 28.1x, PBR 6.0x, ROE 23.5%, Dividend Yield 0.4%, EV/EBITDA 18.5x
- Stock Metrics: Capital Stock KRW 110 Billion, Outstanding Shares 22.0 Million shares, Market Cap KRW 15,444 Billion, Foreign Ownership 26.7%, 52-Week Range KRW 364,500 ~ KRW 1,020,000, 60-Day Avg Daily Volume 198,123 shares, 60-Day Avg Daily Trading Value KRW 164.7 Billion
2. [Market Opportunities & Business Outlook]
- 2Q26 Earnings Review:
- Consolidated revenue reached KRW 1,110.1 Billion and operating profit recorded KRW 105.7 Billion (OPM 9.5%), broadly meeting market consensus (KRW 1,164.6 Billion revenue, KRW 110.5 Billion operating profit).
- Operating profit increased +29.5% YoY and OPM improved by +1.3%p YoY.
- QoQ margin moderation (from 14.7% to 9.5%) was driven by base effects from 1Q accelerated deliveries, temporary lower UAE Cheongung shipments (KRW 99 Billion), and a reduced high-margin export revenue mix (from 34.7% to 25.4%).
- Order Backlog & Global Pipeline Expansion:
- Total order backlog stands at KRW 24.6 Trillion (including KRW 14 Trillion in exports, with KRW 9.9 Trillion from Middle Eastern contracts).
- Growing interest in Cheongung-II procurement across Middle Eastern nations as well as Asia (Malaysia, Indonesia, Philippines), with high potential for contract conversion as defensive systems take priority over offensive weapons.
- Pursuing a joint venture in Poland with domestic defense companies to explore Western European multi-layer air-defense opportunities.
- Large-Scale CapEx & Workforce Expansion:
- Total investments of over KRW 1.3 Trillion over the past three years (including planned amounts), such as Gumi facility expansions and Sejong R&D site acquisitions.
- Workforce expanded by 69% between 2020 and 2025, leading global defense peers, with continuous hiring concentrated in high-level R&D talent.
Editor’s Comment (Perspective)
The covering analyst views LIG D&A not as an enterprise constrained by quarterly delivery base effects, but as a premier global defense contractor actively expanding its manufacturing footprint and elite R&D talent to absorb robust international demand. This perspective places primary importance on the upgraded full-year OPM guidance, broad pipeline expansion spanning Middle Eastern countries, Asia, and Western Europe (via the Polish joint venture initiative), and substantial CapEx investments (over KRW 1.3 Trillion) over short-term quarterly revenue variations.
To verify whether this investment thesis continues to materialize, primary focus should be directed toward the quarterly recovery pace of UAE Cheongung deliveries in 2H, the execution of new export contracts across Middle Eastern partners and Asia, and operational progress under the Polish joint venture initiative in Western Europe. 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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