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[Alpha Biz= Reporter Kim Sangjin] KB Securities has maintained its "Buy" rating and target price of 310,000 KRW for LIG Nex1, despite a mixed third-quarter performance.
The company's Q3 results showed a consolidated revenue of 740.3 billion KRW, which met market expectations, but its operating profit of 51.9 billion KRW fell short.
Jung Dong-ik, an analyst at KB Securities, noted that pre-tax and net income also underperformed due to the lower operating profit. Although Ghost Robotics, acquired by LIG Nex1, was included in the Q3 consolidated results, its revenue impact was minimal at 2.2 billion KRW for August and September.
Key revenue drivers for the quarter included:
Guided weapons sales, which increased by 15.3% year-over-year, bolstered by the domestic production of the Hyeongung missile, second-phase production of both the Blue Shark torpedo and Haegung surface-to-air missile.
Surveillance and reconnaissance grew by 51.5% due to projects like the next-generation local defense radar and long-range acoustic sensors.
Aviation and electronics revenue rose by 54.1%, driven by the Baekdu system capability enhancement and Poland’s FA-50 fighter jet project.
Command and control saw a 76.5% boost from the second-phase production of tactical military radios and a communication network project for the Indonesian police.
While new orders were relatively weak at 278.6 billion KRW, the overall backlog remains strong, with a minor decrease from 19.05 trillion KRW at the end of Q2 to 18.39 trillion KRW at the end of Q3.
The low Q3 order intake is partly due to the 3.7 trillion KRW Cheongung II order from Iraq, announced on September 20, which has not yet been reflected in new orders. Including this, LIG Nex1's cumulative orders for the first three quarters would reach approximately 4.8 trillion KRW, suggesting potential for gradual performance improvement moving forward.
Alphabiz Reporter Kim SangJin(letyou@alphabiz.co.kr)
