[Click eStock] "LIG Nex1, Target Price 200,000 Won... Coverage Initiated"

On the 20th, BNK Investment & Securities initiated coverage on LIG Nex1 with a 'Buy' rating and a target price of 200,000 KRW.

Researcher Lee Sang-hyun of BNK Investment & Securities presented three reasons for this decision in the company report released that day.

First, following orders for the UAE, the backlog has significantly increased with the recent order for the Cheongung-II system destined for Saudi Arabia, and further orders are expected for guided weapons related to Romania's air defense network and the Shingung system for the U.S. market. Additionally, since more than 50% of the order backlog consists of export projects, the export ratio is expected to gradually increase, leading to improved profitability for the company. Lastly, LIG Nex1 plans to acquire Ghost Robotics (GRC), a U.S.-based robot development and manufacturing company, by the end of June, securing future growth engines related to robotics and anticipating synergy effects in the defense sector.

The first quarter performance was also favorable. LIG Nex1's consolidated results for Q1 recorded sales of 763.5 billion KRW, operating profit of 67 billion KRW, and an operating margin of 8.8%, surpassing market expectations for operating profit by 16%. Researcher Lee Sang-hyun analyzed, "Despite significant sales growth, the slight decrease in operating profit was largely due to the inclusion of sales from low-profit export projects (for the Indonesian National Police) and base effects such as delayed penalties and reversal of loss provisions reflected in the same period last year."

This year’s consolidated performance is forecasted at sales of 3.0733 trillion KRW, operating profit of 237.6 billion KRW, and an operating margin of 7.7%. The researcher explained, "As development sales gradually convert to mass production sales, high sales growth is expected. Although profitability may be somewhat lower than last year due to the impact of exports such as the Indonesian National Police communication network, which has low margins, and the transition phase of development sales, the overall operating profit scale will increase."