[Click eStock] "LIG Nex1, Order Backlog and Export Ratio Increase... Target Price Also Raised"

[Asia Economy Reporter Kwon Jae-hee] IBK Investment & Securities maintained its 'Buy' rating on LIG Nex1 on the 24th and raised the target price from 120,000 KRW to 140,000 KRW.

LIG Nex1's Q2 performance this year recorded sales of 490.2 billion KRW and operating profit of 47.2 billion KRW, increasing by 12% and 64% respectively compared to the previous year. The operating profit margin also rose by 3.1 percentage points during the same period to 9.6%. The company achieved results exceeding consensus estimates in Q2 following Q1.

Lee Sang-hyun, a researcher at IBK Investment & Securities, analyzed, "The increase in mass production business sales, improved profit margins due to the expansion of export business proportion, contract amount increases in some projects, and cost ratio improvements drove the performance," adding, "Even excluding one-time gains (approximately 7 billion KRW), the operating profit margin is estimated to be around 8.2%."

LIG Nex1's export ratio is expected to continue rising. As of the first half of the year, exports amounted to 92.9 billion KRW, with an export ratio of 10%. This represents increases of 104% and 4 percentage points respectively compared to the previous year. The rise in export ratio is estimated to have improved the margin by more than 1 percentage point. By the end of the year, the export ratio is expected to exceed 15%, as exports of walkie-talkies to Indonesia, which had been delayed, will be reflected from Q3. Although there were concerns that the Indonesian walkie-talkie business, classified as the 5th industry, would have low margins, it is expected to achieve margins above domestic levels.

In particular, exports account for about 40% of the order backlog and are expected to soon exceed 50%, indicating that the export ratio will continue to increase going forward.

The researcher stated, "As of the end of the first half, the order backlog recorded 8.1 trillion KRW, a 17% increase compared to 6.9 trillion KRW in the same period last year," adding, "Considering export contracts for UAE M-SAM, counter-battery fire systems, and the development of long-range air-to-ground guided weapon systems, the order backlog is expected to reach the 11 trillion KRW level by the end of the year."

This content was produced with the assistance of AI translation services.