[Edaily Reporter kyoungeun kim ] On the 22nd, Daol Investment & Securities announced that it is lowering its fair value estimate for LIG Defense & Aerospace ( LIG Nex1 Co., Ltd.(079550)) from 1.1 million won to 980,000 won, citing expectations that the company’s second-quarter earnings will fall short of market expectations. The firm maintained its “Buy (BUY)” investment rating.
In a report released that day, Choi Gwang-sik, an analyst at Daol Investment & Securities, estimated LIG Defense&Aerospace’s second-quarter revenue at 1.1841 trillion won (up 25% year-over-year, up 1% quarter-over-quarter) and operating profit at 98.7 billion won (up 27%, down 42%). These figures are below the market consensus. Analyst Choi stated, “The company has indicated that the 50 billion won in revenue from the emergency delivery of Cheongung-2 components to the United Arab Emirates (UAE) in the first quarter will not be repeated in the second quarter, and the decline in precision-guided munitions (PGM) exports is due to the high base effect from the first quarter,” adding, “We maintain our earnings forecast, reflecting the seasonal trends that have persisted since last year.”
However, Analyst Choi emphasized the need to focus on year-over-year growth in revenue and profit. He stated, “This year-over-year growth is underpinned by the longest-ever backlog (export backlog of 14.2 trillion won, with projected export revenue of 1.3 trillion won this year) and the expansion of production capacity to meet it, ensuring sustained growth through 2030.”
He continued, “Expectations for surface-to-air systems are continuing to rise amid the prolonged war in the Middle East,” adding, “The company’s year-over-year growth—the highest among its peers—is also attractive.” He further explained, “This growth is expected to continue through 2029, supported by an export backlog of 14.2 trillion won, and capital expenditures (CAPEX) to accommodate this are currently underway.”
Regarding the medium- to long-term order pipeline, he said, “Expectations remain high for new Cheongung-2 purchasers in the Middle East, Saudi Arabia’s Phase 2 (Ph2), the U.S. Bigung project, and dual purchases of long-range surface-to-air guided missiles (L-SAM) in the Middle East.” In the past three months, Malaysia’s Haeseong and Indonesia’s Cheongung-2 have been newly added to the pipeline.
Researcher Choi stated, “We are reviewing a partnership with Indonesia’s state-owned aircraft manufacturer (PTDI) for the local co-production, sales, and technical support of precision-guided weapons such as the Cheongung-2,” adding, “We can expect positive results from our efforts, including our patience in the Indonesian radio business.”
Regarding Malaysia, he said, “The supplier of ship-to-ship guided missiles for the littoral combat ships (LCS) being procured by the Malaysian Navy will be decided in July,” adding, “Following the Norwegian government’s revocation of the export license, three systems—including Haeseong—are currently competing for the contract.”