[Click eStock] "LIG Nex1, High Visibility Long-Term Growth... Target Price Up"

Target Price Raised by 7% Compared to Previous Level

On the 17th, Samsung Securities raised the target price for LIG Nex1 from 300,000 KRW to 320,000 KRW, citing high visibility of long-term growth potential. The investment rating was maintained at 'Buy.'

Han Young-su, a researcher at Samsung Securities, explained, "Due to the nature of the main products, which have a significant time lag between export orders and revenue recognition, expecting a rapid improvement in profitability this year is somewhat premature. The full-scale re-rating is expected in 2026 rather than this year. However, with repeated large-scale orders, there is room to revise upward this year's sales estimates. We raised the absolute profit estimate by 7% and increased the target price by 7% accordingly."

Although LIG Nex1's fourth-quarter results last year exceeded market expectations, the operating profit margin was weaker than anticipated. Researcher Han said, "The fourth-quarter operating profit surpassed market expectations by 19%, mainly due to a significant increase in sales. However, the increase in operating profit was not proportional to the sales growth, resulting in an operating profit margin below expectations. This was due to loss provisions related to large-scale development orders and the consolidation of Ghost Robotics, a robot company acquired by the firm, which also weighed on profitability."

LIG Nex1's order backlog has maintained an upward trend for seven consecutive years, surpassing 20 trillion KRW. Han noted, "In the fourth quarter alone, orders worth 3.5 trillion KRW were secured, accounting for 77% of the total orders for 2024. Remarkably, this figure does not include the export order of Cheongung to Saudi Arabia. This order has been reported in the media as a project worth at least 3 trillion KRW and is expected to be recognized as an order in 2025. Due to the surge in orders, LIG Nex1's year-end order backlog exceeded 20 trillion KRW, reaching an all-time high," he analyzed.

The evaluation highlights high visibility of long-term growth potential. Researcher Han stated, "Visibility of long-term profitability improvement is improving as development projects will lead to mass production, export order revenue recognition and new facility operation rates will also begin in earnest. Although the recent sharp rise in stock price has temporarily increased valuation pressure, considering the high visibility of long-term growth, a buying strategy during corrections remains valid."