Brokerage : Kiwoom Securities
Analyst : Hangyeol Lee
Investment Rating : BUY (Maintain)
Target Price : KRW 1,350,000 (Upward)
Core Momentum : Surging global demand for air defense systems, supported by a ~KRW 10T Middle East backlog, pipeline expansion into Qatar/Kuwait/Southeast Asia, and European market entry via Rheinmetall JV
1. [Valuation & Key Financial Metrics]
- Investment Rating & Target Price: Rating BUY (Maintain), Target Price KRW 1,350,000 (Raised from previous target), Current Price KRW 1,002,000 (As of June 16, 2026), Market Cap KRW 22,044.0 Billion
- Valuation Methodology: Target price raised to KRW 1,350,000 by applying a Target P/E multiple of 40x to 2028 estimated EPS of KRW 33,974
- 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 (KRW 5,009.3 Billion per quarterly breakdown table), 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 57.2x, PBR 12.54x, EV/EBITDA 38.0x, 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 41.3x, PBR 9.87x, EV/EBITDA 27.0x, ROE 26.7%, Net Debt Ratio 33.5%
- Stock Metrics: KOSPI 6,726.60pt, Outstanding Shares 22,000 Thousand shares, 3-Month Avg Daily Volume 363 Thousand shares, Foreign Ownership 25.3%, Dividend Yield (2026E) 0.3%, BPS (2026E) KRW 79,879, Major Shareholders LIG & 8 affiliated parties (38.2%)
2. [Market Opportunities & Business Outlook]
- 2Q26 Earnings Outlook:
- Consolidated revenue projected at KRW 1,192.1 Billion (+26.1% YoY) and operating profit at KRW 107.9 Billion (+39.1% YoY, OPM 9.1%), meeting market consensus.
- Export revenue expected to reach KRW 333.8 Billion (+103% YoY) supported by smooth final deliveries of the 3rd battery for the UAE Cheongung-II contract, with export share estimated at 28% (-6%p QoQ due to high 1Q base effects).
- Domestic R&D and mass-production businesses continue to make stable contributions to overall growth.
- Expanding Global Order Pipeline:
- Middle East: Combat-proven performance is accelerating Cheongung-II procurement discussions with several regional nations, including Qatar and Kuwait, with additional Middle Eastern awards expected in 2H26. Order backlog for the three Middle Eastern clients (UAE, Saudi Arabia, Iraq) stands at ~KRW 10 Trillion.
- Southeast Asia: Indonesia and Malaysia are also pursuing the introduction of Cheongung-II. Recently, the Indonesian Defense Logistics Agency issued a Letter of Intent (LOI) for two batteries and plans to execute a medium-range surface-to-air missile procurement program valued at approximately USD 460 Million.
- Europe: Joint venture established with Germany’s Rheinmetall to co-develop new short-range air defense missile systems for European/NATO markets and localize medium-to-long-range air defense architecture, facilitating entry into European defense channels.
Editor’s Comment (Perspective)
The covering analyst views LIG D&A as a premier defense contractor translating global interceptor inventory shortages and combat-proven reliability into sustained multi-regional contract wins. This perspective prioritizes the execution of the ~KRW 10 Trillion Middle East backlog, expanding procurement pipelines across Middle Eastern nations (Qatar, Kuwait) and Southeast Asia (Indonesia’s USD 460M program and LOI conversion, Malaysia), and the long-term strategic benefits of entering NATO procurement channels via the Rheinmetall joint venture over quarterly delivery fluctuations.
To verify whether this investment thesis continues to materialize, primary focus should be directed toward the formal execution of Cheongung-II contracts in the Middle East and Southeast Asia (Indonesia’s procurement program, Malaysia’s discussions) in 2H26, operational progress under the Rheinmetall JV co-developing European air defense systems, and capacity additions required to support backlog fulfillment beyond KRW 10 Trillion. 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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