[Alpha Biz= Paul Lee] Hanwha Investment & Securities announced on July 23 that it maintains a “Buy” rating on LIG Nex1, raising its target price from KRW 460,000 to KRW 740,000, citing clear long-term growth momentum. The previous closing price was KRW 591,000.



According to analyst Bae Sung-jo, LIG Nex1 is expected to post Q2 sales of KRW 901 billion, up 49% year-on-year, and operating profit of KRW 86.4 billion, up 75% from the same period last year, in line with market expectations. He attributed this to the full-scale recognition of UAE-bound Cheongung-II (M-SAM Block II) missile system exports and solid domestic sales. However, he also factored in a potential increase in development expenses due to the higher portion of domestic development projects.



Export sales for the second quarter are estimated at KRW 203.9 billion, marking a 148% increase year-on-year, with exports accounting for 22.6% of total sales. While the company’s order backlog has surged to KRW 22.9 trillion—thanks to successive Cheongung-II export contracts—exports are still projected to comprise less than 25% of total sales this year.



“The solid backlog warrants a longer-term view,” Bae said, predicting that export share will surpass 30% in 2027 when mass production of Cheongung-II systems for the UAE, Saudi Arabia, and Iraq is reflected in revenue. He also noted that another large-scale export deal could be signed around 2028, when export revenues from current contracts are expected to peak.



Rather than focusing on the current absence of new large orders, Bae advised paying attention to undisclosed export contracts. As of the end of Q1, of the KRW 22.9 trillion in total backlog, approximately KRW 3 trillion remains confidential—likely tied to repeat-demand items such as training munitions and MRO services, which tend not to be quickly depleted.



“These contracts provide a stable foundation for export performance,” Bae concluded, adding, “Amid renewed focus on air defense systems following recent Middle East tensions, the company’s long-term growth trajectory remains very clear.”

 

 

 

 

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