Brokerage : Kiwoom Securities
Analyst : Hangyeol Lee
Investment Rating : BUY (Maintain)
Target Price : KRW 1,250,000 (Maintain)
Core Momentum : Strong 1Q26 earnings surprise driven by UAE Cheongung-II exports, with expanding order pipelines across the Middle East (Qatar, Kuwait) and Southeast Asia amid structural global air defense demand
1. [Valuation & Key Financial Metrics]
- Investment Rating & Target Price: Rating BUY (Maintain), Target Price KRW 1,250,000 (Maintain), Current Price KRW 866,000 (As of May 7, 2026), Market Cap KRW 19,052.0 Billion
- 2026 Full-Year Forecasts: Revenue projected at KRW 5,089.3 Billion (+18.2% YoY) and Operating Profit at KRW 441.6 Billion (+38.2% YoY, OPM 8.7%), with upside potential if subsidiary Ghost Robotics secures additional Vision 60 contracts to narrow losses
- Financial Forecasts & Historicals (IFRS Consolidated):
- 2024: Revenue KRW 3,276.3 Billion, Operating Profit KRW 223.4 Billion (OP Margin 6.8%), EBITDA KRW 309.1 Billion, Pre-tax Profit KRW 203.2 Billion, Net Profit KRW 212.8 Billion, Controlling Net Profit KRW 219.4 Billion, EPS KRW 9,974 (YoY +25.4%), PER 22.1x, PBR 4.01x, EV/EBITDA 15.6x, ROE 19.4%, Net Debt Ratio -6.3%
- 2025: Revenue KRW 4,306.9 Billion, Operating Profit KRW 319.4 Billion (OP Margin 7.4%), EBITDA KRW 443.6 Billion, Pre-tax Profit KRW 278.4 Billion, Net Profit KRW 237.5 Billion, Controlling Net Profit KRW 253.4 Billion, EPS KRW 11,516 (YoY +15.5%), PER 36.6x, PBR 6.48x, EV/EBITDA 23.0x, ROE 19.2%, Net Debt Ratio 60.3%
- 2026F: Revenue KRW 5,089.3 Billion, Operating Profit KRW 441.6 Billion (OP Margin 8.7%), EBITDA KRW 604.5 Billion, Pre-tax Profit KRW 450.9 Billion, Net Profit KRW 353.3 Billion, Controlling Net Profit KRW 385.1 Billion, EPS KRW 17,504 (YoY +52.0%), PER 49.5x, PBR 10.84x, EV/EBITDA 35.7x, ROE 24.2%, Net Debt Ratio 52.3%
- 2027F: Revenue KRW 5,928.7 Billion, Operating Profit KRW 652.0 Billion (OP Margin 11.0%), EBITDA KRW 845.4 Billion, Pre-tax Profit KRW 671.2 Billion, Net Profit KRW 533.6 Billion, Controlling Net Profit KRW 533.6 Billion, EPS KRW 24,256 (YoY +38.6%), PER 35.7x, PBR 8.53x, EV/EBITDA 25.3x, ROE 26.7%, Net Debt Ratio 33.5%
- Stock Metrics: KOSPI 7,490.05pt, Outstanding Shares 22,000 Thousand shares, 3-Month Avg Daily Volume 472 Thousand shares, Foreign Ownership 23.2%, Dividend Yield (2026E) 0.3%, BPS (2026E) KRW 79,879, Major Shareholders LIG & 8 affiliated parties (38.2%)
2. [Market Opportunities & Business Outlook]
- 1Q26 Earnings Review:
- Consolidated revenue reached KRW 1,167.9 Billion (+28.7% YoY) and operating profit recorded KRW 171.1 Billion (+56.1% YoY, OPM 14.7%), substantially outperforming consensus (KRW 117.3 Billion) and internal forecasts (KRW 120.3 Billion).
- UAE Cheongung-II revenue reached ~KRW 170.0 Billion (more than doubling YoY), lifting total export revenue to KRW 405.2 Billion (+119% YoY, 34.7% of total revenue) alongside high-margin follow-on support contracts and broad export profitability improvements.
- Ghost Robotics posted revenue of KRW 4.7 Billion and an operating loss of KRW 13.0 Billion.
- Rising Air Defense Demand & Pipeline Expansion:
- Despite potential ceasefire discussions between the US and Iran, global demand for surface-to-air missile systems continues to expand.
- In the Middle East, active procurement discussions for Cheongung-II are multiplying across regional nations including Qatar and Kuwait.
- Beyond the Middle East, international interest in Korean air defense is broadening, exemplified by the Haegung (K-SAAM) supply contract signed with Malaysia in late April.
- Securing additional contracts across the Middle East and Southeast Asia will further accelerate medium-to-long-term earnings compounding.
Editor’s Comment (Perspective)
The covering analyst views LIG D&A not through the lens of short-term geopolitical sentiment swings surrounding ceasefire talks, but as a premier global defense contractor capitalizing on sustained interceptor shortages to expand its international footprint. This perspective highlights the proven earnings power demonstrated by high-margin export deliveries in 1Q26 and the strong visibility of follow-on opportunities spanning Qatar, Kuwait, and Southeast Asia (following the Malaysian Haegung contract).
To verify whether this investment thesis continues to materialize, primary focus should be directed toward the formal signing of Cheongung-II contracts across Middle Eastern partners (Qatar, Kuwait), follow-on naval/air defense awards in Southeast Asia, and loss reductions at Ghost Robotics via Vision 60 order additions to support the full-year 8.7% OPM projection. 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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