[Click eStock] "LIG Nex1, Undervalued Compared to Performance"

NH Investment & Securities "Target Price Raised to 50,000 Won"
"Will Benefit from New Product Launches Through 2028"

[Asia Economy Reporter Gong Byung-sun] An analysis has emerged that LIG Nex1 is undervalued compared to its continued sales growth. It is expected to maintain its growth momentum, with the effects of new product launches continuing through 2028.

On the 30th, NH Investment & Securities raised LIG Nex1's target stock price from the previous 43,000 KRW to 50,000 KRW, maintaining a 'Buy' rating. NH Investment & Securities explained that the new target price was calculated by applying a PER (price-to-earnings ratio) of 19 times based on this year's earnings per share (EPS) forecast. This is a 20% discount compared to the machinery industry average of 23.7 times.

The analysis suggests that LIG Nex1 is undervalued. Jinmyung Choi, a researcher at NH Investment & Securities, said, "LIG Nex1's PER valuation is about half of the machinery industry average," adding, "As a company 100% focused on defense, it is not affected by economic recovery benefits, but its own performance improvements have been made, so it is excessively undervalued."

In fact, LIG Nex1 began showing solid performance starting last year. Sales successfully turned profitable, and normalization of operating profit margins was confirmed. Export profits are also expected to improve. The government announced plans to increase defense spending by an average of 6.1% annually over the next five years, and the weakening of the US dollar has also eased.

Growth is expected to continue this year as well. Over the past year, LIG Nex1's order backlog increased by 18.2%. The order backlog is 4.6 times the sales revenue of last year. The recent rise in military tensions in the Middle East is also favorable for LIG Nex1.

The order backlog is expected to take off again starting in 2022, as it is the time when the development of the Long-range Surface-to-Air Missile (L-SAM) is expected to be completed. Once mass production is decided, initial contracts will be executed. Researcher Choi predicted, "The effects of new product launches will continue through the release of avionics equipment for the Korean Fighter eXperimental (KFX) in 2025 and air-to-ground missiles for KFX in 2028."