LIG Nex1 was weak early in the day on the 22nd. The poor investment sentiment is interpreted as resulting from the continued burden of valuation (stock price level compared to performance) as forecasted by the securities industry.
As of 9:10 a.m. on the same day, LIG Nex1 was trading at 595,000 won, down 35,000 won (5.56%) from the previous trading day.
Korea Investment & Securities issued a report on the same day, stating that the valuation burden for LIG Nex1 is high until discussions of new export contracts take place, lowering its investment opinion from 'buy' to 'neutral.'
Jang Nam-hyun, a researcher at Korea Investment & Securities, noted that while LIG Nex1's forward price-to-earnings ratio (PER) for next year is 33.8 times, the average for European defense companies is 33.5 times, indicating that additional stock price increases are expected to be limited.
Jang noted, 'Although we have secured numerous export pipelines, including additional exports of the Cheongung-II to Saudi Arabia, and exports of L-SAM to the Middle East and the Stinger to the United States, the characteristics of the products require a long time to finalize contracts,' adding that 'thus, the export momentum for this second half of the year is also expected to be lacking.'
However, the second-quarter results are expected to exceed market expectations, buoyed by stable business progress domestically and internationally. Korea Investment & Securities projected that LIG Nex1's consolidated sales and operating profit for the second quarter will record 893 billion won and 87.8 billion won, respectively. This represents an increase of 47.7% and 78.7% compared to the same period last year. The operating profit surpasses the securities industry forecast by 4.4%.