National Pension's Favorite Stock LIG Nex1, Stock Price Tripled in 2 Years... Earned Billions for the Pension Fund

[Asia Economy Reporter Park So-yeon] It has been revealed that the National Pension Service (NPS) earned potential profits worth hundreds of billions of won through large-scale shareholding in the defense industry specialist company LIG Nex1.

According to the NPS fund disclosure on the 12th, as of the end of 2021, the National Pension Service holds a 13.58% stake in LIG Nex1. The shareholding ratio increased by 2.87 percentage points in one year from 10.71% at the end of 2020.

According to LIG Nex1’s Q1 2022 report, the NPS shareholding ratio was slightly adjusted to 13.47%, but it still holds more than 13%. As a result, among domestic listed companies, the company in which the National Pension Service holds the largest stake has shifted from Hansol Chemical to LIG Nex1. It has become the most favored stock by the National Pension Service.

Along with the effect of the National Pension Service’s purchases and expectations for defense stocks, LIG Nex1’s stock price has risen about threefold from the 30,000 won range to the 90,000 won range over the past two years. As of 10 a.m. on the day, LIG Nex1 is trading at 88,900 won on the KOSPI market.

The war between Russia and Ukraine has increased global defense demand, providing upward momentum. Due to the nature of the defense industry fostered under government leadership, it has also emerged as a defensive stock in the stock market amid concerns over interest rate hikes and economic recession.

Strong corporate performance and expectations for growth in the aerospace industry also played a role. In addition, rising tensions between the U.S. and China and expectations for arms export contracts have driven defense stock prices upward.

Accordingly, the value of LIG Nex1 shares held by the National Pension Service has risen from about 66 billion won at the end of 2020 to approximately 270 billion won currently. Even excluding the additional 2.87% stake purchased, the share value has increased by more than 150 billion won.

LIG Nex1 was established on February 25, 1998, with its origin in Geumseong Precision Industry, founded in 1976. Its main clients include the Defense Acquisition Program Administration, Agency for Defense Development, and Ministry of National Defense of Korea. In 2004, LG Corporation acquired LG Innotek’s defense business division and incorporated it into the LIG Group. Its core business is guided weapons, and it is a defense industry company that develops and produces precision electronic weapon systems in communications, information electronics, and command and control sectors. As of Q1 this year, LG Corporation holds a 46.36% stake as the largest shareholder, making it a key affiliate of the LIG Group.