Brokerage : Kiwoom Securities
Analyst : Hangyeol Lee
Investment Rating : BUY (Maintain)
Target Price : KRW 1,250,000 (Upward)
Core Momentum : Severe PAC-3 interceptor shortages and rising air defense demand, underpinned by a ~KRW 10T backlog in three Middle Eastern clients, pipeline expansion into Qatar/Kuwait, and the Malaysian Haegung contract
1. [Valuation & Key Financial Metrics]
- Investment Rating & Target Price: Rating BUY (Maintain), Target Price KRW 1,250,000 (Raised from previous target), Current Price KRW 968,000 (As of April 29, 2026), Market Cap KRW 21,296.0 Billion
- Valuation Methodology: Target price raised to KRW 1,250,000 by applying a Target P/E multiple of 40x to 2028 estimated EPS of KRW 30,661
- 2026 Full-Year Forecasts: Revenue projected at KRW 5,035.6 Billion (+16.9% YoY) and Operating Profit at KRW 424.2 Billion (+32.8% YoY, OPM 8.4%)
- 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 5,035.6 Billion, Operating Profit KRW 424.2 Billion (OP Margin 8.4%), EBITDA KRW 587.2 Billion, Pre-tax Profit KRW 433.5 Billion, Net Profit KRW 344.6 Billion, Controlling Net Profit KRW 375.6 Billion, EPS KRW 17,075 (YoY +48.3%), PER 55.0x, PBR 11.82x, EV/EBITDA 36.8x, ROE 23.6%, Net Debt Ratio 52.6%
- 2027F: Revenue KRW 5,859.0 Billion, Operating Profit KRW 634.9 Billion (OP Margin 10.8%), EBITDA KRW 828.2 Billion, Pre-tax Profit KRW 653.7 Billion, Net Profit KRW 519.7 Billion, Controlling Net Profit KRW 519.7 Billion, EPS KRW 23,622 (YoY +38.3%), PER 39.8x, PBR 9.35x, EV/EBITDA 25.9x, ROE 26.3%, Net Debt Ratio 34.4%
- Stock Metrics: KOSPI 6,690.90pt, Outstanding Shares 22,000 Thousand shares, 3-Month Avg Daily Volume 460 Thousand shares, Foreign Ownership 23.2%, Dividend Yield (2026E) 0.3%, BPS (2026E) KRW 79,449, Major Shareholders LIG & 8 affiliated parties (38.2%)
2. [Market Opportunities & Business Outlook]
- 1Q26 Earnings Outlook:
- Consolidated revenue projected at KRW 1,057.1 Billion (+16.5% YoY) and operating profit at KRW 120.3 Billion (+5.9% YoY, OPM 11.4%), in line with market consensus.
- Domestic development/production and export projects are proceeding according to original schedules, limiting near-term volatility from the US/Israel-Iran conflict. Middle East export revenue expansion will drive gradual top- and bottom-line improvements.
- Geopolitical Drivers & PGM Expansion Opportunities:
- According to CSIS, 39 days of regional conflict rapidly depleted air defense interceptor inventories. An estimated 45–61% of total PAC-3 stockpiles (~2,300 missiles) were consumed, and replenishing inventory will take considerable time given annual PAC-3 production capacity of ~650 missiles.
- Rising interest in Cheongung-II as a critical complement to Patriot systems: LIG D&A holds ~KRW 10 Trillion in Cheongung-II battery and missile backlogs across three Middle Eastern clients (UAE, Saudi Arabia, Iraq), with customer base expected to expand to Qatar and Kuwait.
- Product Diversification & Pipeline Catalysts:
- Signed a KRW 140.0 Billion supply contract with Malaysia for Haegung (K-SAAM) ship-to-air missile systems.
- Expected revival of the US Poniard (Bigung) program and expanding order preparations for Ghost Robotics’ Vision 60 quadruped platform.
Editor’s Comment (Perspective)
The covering analyst views LIG D&A not through the lens of short-term quarterly delivery shifts, but as an indispensable beneficiary of acute global interceptor shortages (depletion of PAC-3 stockpiles). This perspective prioritizes the high visibility of the ~KRW 10 Trillion Middle East backlog, expanding international pipelines into Qatar and Kuwait, and system diversification (the KRW 140B Malaysian Haegung deal, US Poniard re-acceleration, and Vision 60) as primary drivers justifying an upward revision in target price to KRW 1,250,000.
To verify whether this investment thesis continues to materialize, primary focus should be directed toward the conversion of Cheongung-II discussions into binding contracts in Qatar and Kuwait, execution of the Malaysian Haegung contract, progress on the US Poniard project, and scheduled mass production across the KRW 10 Trillion Middle East backlog. 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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