[Edaily Reporter Kim Kyung-eun] On the 17th, Kiwoom Securities raised its target price for #LIG Defense & Aerospace (LIG D&A) to 1.35 million won—an 8% increase from the previous target—citing an expanding order pipeline. The firm maintained its “Buy” rating.

Lee Han-gyeol, an analyst at Kiwoom Securities, stated in a report released that day, “Now is the time to take note of the expanding order opportunities driven by growing global demand for air defense missiles.”

The firm assesses that global demand for air defense missiles is rising sharply due to the Russia-Ukraine war and conflicts in the Middle East. In the United States, demand is expanding as the government works to replenish depleted missile stockpiles, and large-scale production capacity expansion is underway.

LIG Defense & Aerospace currently holds an order backlog of approximately 10 trillion won from three Middle Eastern countries—the United Arab Emirates (UAE), Saudi Arabia, and Iraq—and the report explains that expanding production capacity will be necessary to secure additional orders. From a medium- to long-term perspective, the strategy to enter the European market through a joint venture (JV) with Rheinmetall was also evaluated positively.

The analyst stated, “In addition to the Middle East, our primary export region, inquiries regarding the adoption of Cheon-gung II are increasing in Southeast Asia, and in Europe, we expect to expand our order pipeline through cooperation with Rheinmetall.” He added, “Cheon-gung II’s combat effectiveness has been verified during the war in the Middle East, and negotiations for its adoption are underway in several Middle Eastern countries, including Qatar and Kuwait.”

He continued, “We expect orders for the Cheongung II for the Middle East to be finalized by the second half of this year,” adding, “Indonesia and Malaysia are also moving forward with plans to acquire the Cheongung II.”

He noted, “The Indonesian Defense Logistics Agency recently issued a letter of intent to purchase two Cheongung II batteries. Malaysia also plans to implement a medium-range surface-to-air missile procurement program worth approximately $460 million,” and predicted, “In Europe as well, we expect the order pipeline to expand from a medium- to long-term perspective.”

He further emphasized, “The company has established a joint venture (JV) with Rheinmetall to target the European and North Atlantic Treaty Organization (NATO) markets, announcing plans to jointly develop a new short-range air defense missile system and localize medium- and long-range air defense systems,” adding, “Through cooperation with Rheinmetall, we expect to enter the European market more smoothly.”

LIG Defense & Aerospace’s second-quarter revenue is expected to reach 1.1921 trillion won, with operating profit at 107.9 billion won—representing year-over-year increases of 26.1% and 39.1%, respectively. These figures are in line with market expectations.

The analyst predicted, “With the recent smooth completion of the delivery of the third Cheongung II battery to the UAE, export revenue is expected to show robust growth, reaching 333.8 billion won—a 103% increase year-over-year.”

He noted, “We estimate that the export share will decrease by approximately 6 percentage points to 28% due to the base effect from the previous quarter,” but added, “As domestic R&D and mass production projects are also progressing smoothly, the company’s overall earnings growth trend is expected to continue.”