Brokerage : SK Securities
Analyst : Shane Han, RA Seoyoung Ko
Investment Rating : BUY (Initiate)
Target Price : KRW 1,150,000 (Initiate)
Core Momentum : Surging demand for interceptor missiles amid tight global capacity post-Iran war, with multi-year growth secured across Middle Eastern mass-production ramps and leadership across ISR, C4I, and PGM
1. [Valuation & Key Financial Metrics]
- Investment Rating & Target Price: Rating BUY (Initiate), Target Price KRW 1,150,000 (Initiate), Current Price KRW 810,000 (As of April 6, 2026), Upside Potential 42.0%
- Valuation Methodology: Coverage initiated with a Target Price of KRW 1,150,000 by applying a Target P/E multiple of 37.4x to the 2028 estimated EPS of KRW 30,128
- Financial Forecasts & Historicals:
- 2026E: Revenue KRW 5,049 Billion, Operating Profit KRW 489 Billion, Controlling Net Profit KRW 386 Billion, EPS KRW 17,564, PER 49.0x, PBR 10.8x, EV/EBITDA 22.0x, ROE 24.3%, Dividend Payout Ratio 25.4%
- 2027E: Revenue KRW 6,021 Billion, Operating Profit KRW 632 Billion, Controlling Net Profit KRW 499 Billion, EPS KRW 22,694, PER 37.9x, PBR 8.8x, EV/EBITDA 17.9x, ROE 25.6%, Dividend Payout Ratio 25.4%
- 2028E: Revenue KRW 7,223 Billion, Operating Profit KRW 839 Billion, Controlling Net Profit KRW 663 Billion, EPS KRW 30,128, PER 28.5x, PBR 7.0x, EV/EBITDA 14.3x, ROE 27.4%, Dividend Payout Ratio 23.1%
- Stock Indicators: KOSPI 5,450.33pt, 52-Week High KRW 860,000, 60-Day Avg Daily Trading Value KRW 264 Billion, Outstanding Shares 22.0 Million shares, Market Cap KRW 17,820 Billion, Foreign Ownership 24.28%, Major Shareholders LIG & 8 affiliated parties (38.21%), National Pension Service (9.67%)
2. [Market Opportunities & Business Outlook]
- 1Q26 Earnings Outlook:
- Consolidated revenue projected at KRW 1,028 Billion (+21.5% YoY, -21.5% QoQ) and operating profit at KRW 129.5 Billion (+14.0% YoY, +234.8% QoQ), slightly above market consensus (KRW 110.3 Billion).
- UAE Cheongung-II recognition follows scheduled percentage-of-completion accounting rather than an unexpected one-off surge; long-term focus should remain on multi-year backlog conversion and surging global demand.
- Sequential Middle East Deliveries & Subsidiary Turnaround:
- UAE Cheongung-II mass-production deliveries accelerate in 2026, followed by sequential delivery additions from Saudi Arabia in 2027 and Iraq in 2028, driving sustained export mix expansion and top-/bottom-line growth.
- Ghost Robotics (GRC) is projected to narrow operating losses in 2026 and turn profitable starting in 2027.
- Global Interceptor Scarcity & System Integration Strength:
- Limited global interceptor capacity elevates Cheongung-II’s market positioning, driving potential follow-on procurement and early delivery requests from existing clients (UAE, Saudi Arabia, Iraq).
- Expanding new export contracts expected across the Middle East and Europe, alongside higher potential for early international contract execution for L-SAM.
- Solidified positioning as a defense Top-Pick due to integrated domain leadership across all three modern warfare pillars: ISR (Intelligence, Surveillance, and Reconnaissance), C4I, and PGM (Precision Guided Munitions).
Editor’s Comment (Perspective)
The covering analyst views LIG D&A not merely through quarterly delivery milestone timings, but as a top-pick defense contractor warranting a sustained valuation re-rating given acute global interceptor shortages and integrated capabilities across modern warfare systems (ISR, C4I, PGM). This perspective prioritizes the sequential top- and bottom-line expansion anchored by Middle Eastern mass-production ramps (UAE in 2026, Saudi Arabia in 2027, Iraq in 2028) and early export prospects for L-SAM over short-term valuation concerns.
To verify whether this investment thesis continues to materialize, primary focus should be directed toward the execution of UAE Cheongung-II deliveries, follow-on procurement or early delivery requests from the three Middle Eastern clients, new contract awards in Europe and the Middle East, early export traction for L-SAM, and GRC’s operational turnaround 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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