[Click eStock] “LIG Nex1, Additional Upside Potential Remains”

LIG Nex1 Rises 40% in Last 3 Months
Orders from 2015 and 2018 Begin to Reflect in Sales
Samsung Securities Upgrades LIG Nex1 Target Price from 63,000 KRW to 80,000 KRW

[Asia Economy Reporter Gong Byung-sun] LIG Nex1 has signed an export contract for the Cheongung-II with the United Arab Emirates (UAE). Although the stock price has recently risen sharply due to expectations of winning the order, analysis suggests that there is still room for further increase as the orders are being converted into profits.

According to Samsung Securities on the 18th, LIG Nex1 signed an export contract worth 2.6 trillion KRW for the Cheongung-II with UAE's TTI company on the 16th. This accounts for about 61% of the total project scale and exceeds LIG Nex1's annual sales. LIG Nex1's annual sales in 2020 were 1.6 trillion KRW.

However, this contract was already known to the public, and LIG Nex1's stock price has also risen significantly. It increased by 40% over the past three months and by 125% over the past year. The order is confirmed, and the performance for the fourth quarter of last year is also expected to be at a reasonable level. Samsung Securities estimated LIG Nex1's sales for the fourth quarter of last year to be 1.707 trillion KRW, up 46% year-on-year, and operating profit to be 148 billion KRW, up 12.2% during the same period.

(Provided by Samsung Securities)

Nevertheless, Samsung Securities' analysis indicates that there is still room for growth. This is because the improved order performance is gradually being converted into sales and profits.

Han Young-soo, a researcher at Samsung Securities, explained, “Thanks to LIG Nex1's order backlog growing for four consecutive years and surpassing 8 trillion KRW at the end of last year, this year's sales will exceed 2 trillion KRW for the first time since listing,” adding, “In the second half of this year, overseas export projects ordered in 2015 and 2018 will be reflected in sales in earnest.”

Positive momentum is also expected to continue in the order sector this year. Starting with the UAE order, strong performance is anticipated in multiple domestic projects such as the Baekdu system.

Accordingly, Samsung Securities maintained its investment opinion of ‘Buy’ on LIG Nex1 and raised the target stock price from the previous 63,000 KRW to 80,000 KRW. The closing price on the previous day was 68,100 KRW.