Business · Companies · 3 hrs ago
Daishin cuts LIG Defense & Aerospace target price as costs weigh on profits
Daishin Securities lowered its target price for South Korean defense company LIG Defense & Aerospace, from 990,000 won to 830,000 won.
The brokerage expects the company’s third-quarter operating profit to be 20% below market expectations, at 80 billion won.
It says lower sales of some high-margin exports contributed to the weaker expected result.
Research spending and a planned loss provision are also expected to weigh on fourth-quarter profits.
Daishin forecasts full-year operating profit of 375 billion won, below the company’s own guidance, but kept its buy rating after the share price fell.
The brokerage says the company is expanding production capacity in Gimcheon and Gumi to meet global demand for air-defense weapons.
Gimcheon’s expanded plant is due to be completed in early 2027, with its contribution to results expected to build from the second half of that year.
Daishin Securities cut its target price for LIG Defense & Aerospace from 990,000 won to 830,000 won, while keeping its Buy rating.
The brokerage expects the company’s third-quarter operating profit to come in 20% below the market consensus.
It forecast that research and development spending and a provision for a domestic long-range air-to-air missile project will weigh on fourth-quarter costs.
Daishin expects full-year operating profit to reach 375 billion won, below the company’s guidance.
The analyst said the recent share-price drop had made the stock’s valuation attractive compared with global peers.
- Who
- Daishin Securities cut its target price for LIG Defense & Aerospace.
- What
- It lowered the target price to 830,000 won from 990,000 won and kept its Buy rating.
- When
- Daishin announced the change on October 19, according to the article published on October 18 UTC.
- Where
- Not stated
- Why
- The brokerage expects weaker third-quarter profit and higher fourth-quarter costs, but said the stock’s valuation had become attractive after its share-price decline.
This story does not have two clearly opposing sides.
Daishin estimated revenue of 1.178 trillion won and operating profit of 80 billion won for LIG Defense & Aerospace.
The company is expected to face concentrated research and development spending and set a provision for a domestic long-range air-to-air missile development project.
Daishin forecast operating profit of 375 billion won, below company guidance.
The Gimcheon plant is expected to be completed, with its output contribution expected to become significant from the second half of the year.
- Target price
- Cut from 990,000 won to 830,000 won
- Rating
- Buy maintained
- Third-quarter revenue
- Estimated at 1.178 trillion won, up 12.3% year on year
- Third-quarter operating profit
- Estimated at 80 billion won, down 8.9% year on year
- Operating profit consensus
- 100 billion won, 20% above Daishin’s estimate
- Gimcheon plant
- Expected completion in early 2027
What people are saying
Following the recent sharp share-price decline, the 2027 PER has fallen to 20.7 times, below the global peer multiple of 24.1 times, and the stock has entered undervalued territory.
We are pursuing the establishment of a joint venture with Rheinmetall and plan to develop European-style M-SAM and L-SAM systems over the medium to long term.