[Click eStock] "LIG Nex1, Gradual Earnings Improvement Expected... Target Price Maintained"

On the 12th, KB Securities maintained its buy rating and target price of 310,000 KRW for LIG Nex1, stating that "although the company posted disappointing results in the third quarter this year, gradual performance improvement is expected."

On the same day, Jeong Dong-ik, a researcher at KB Securities, said, "LIG Nex1 recorded consolidated sales of 740.3 billion KRW and operating profit of 51.9 billion KRW in the third quarter. While sales met the market consensus, operating profit fell short of expectations, resulting in somewhat disappointing performance."

He added, "Pre-tax profit and net profit also fell below expectations due to the weak operating profit," and explained, "Ghost Robotics, which was recently acquired, was included in the consolidated results from the third quarter, but its sales in August and September amounted to only 2.2 billion KRW, so its impact on consolidated performance was minimal."

During this period, guided missile sales increased by 15.3% year-on-year due to the full-scale domestic mass production of Hyungung, the second mass production of Chung-eo II torpedoes, and the second mass production of Haegung. The surveillance and reconnaissance segment grew by 51.5% due to the next-generation local air defense radar and the mass production of long-range detection acoustic sensors, while the aviation and electronics segment increased by 54.1% thanks to the second phase of the Baekdu system capability enhancement and the Poland FA50 project. The command and control segment grew by 76.5% due to the second mass production of the next-generation military radio (TMMR) and the Indonesian National Police communication network project.

Although new orders were somewhat sluggish at 278.6 billion KRW, future performance is expected to gradually improve. Researcher Jeong said, "Since the amount of new orders was below sales, the order backlog slightly decreased from 19.0053 trillion KRW at the end of the second quarter to 18.3904 trillion KRW at the end of the third quarter," but added, "The reason for the weak third-quarter orders is that the 3.7 trillion KRW Iraq Cheongung II project announced on September 20 has not yet been internally recognized as a new order. Considering this, the cumulative new orders for the first to third quarters this year are around 4.8 trillion KRW."