KB Securities on the 17th said LIG Defense&Aerospace is highly likely to benefit as the importance of air defense missiles has come to the fore due to the Middle East war. It maintained a "Buy" rating and raised its target price to 1.1 million won from 480,000 won. The previous trading day's closing price for LIG Defense&Aerospace was 893,000 won.
LID D&A is a leading domestic defense company that develops advanced weapon systems such as guided weapons and surveillance and reconnaissance, and is responsible for system integration of the Korean medium-range interceptor missile system Cheongung-II.
Jeong Dong-ik, an analyst at KB Securities, said of LIG Defense&Aerospace (LID D&A·LIG Nex1), "Although the stock price has surged recently, there is still 23.7% additional upside from the Apr. 16 close of 893,000 won."
The key basis for the positive outlook on LID D&A is the importance of missile defense revealed in recent wartime conditions.
Jeong said, "The Middle East war served as an opportunity to reaffirm the importance of missile defense," and noted, "Whether there is a defensive system capable of responding to Iran's counterattacks using various missiles and drones has become the factor that determines whether the lives and property of the people can be protected."
Jeong analyzed that in this climate, domestic corporations such as LID D&A will benefit. This is because among countries that produce air defense missiles with ballistic missile interception capabilities, only a few are strong candidates to win orders from key nations such as those in the Middle East.
He explained, "The countries that produce air defense missiles with ballistic interception capabilities are about Korea, the United States, France, Italy and Israel," adding, "There is almost no chance Middle Eastern countries will conduct large-scale arms transactions with Israel, and the United States will be busy for the time being replenishing the stockpiles consumed this time."
He went on, "A member of the National Assembly's National Defense Committee said, 'Saudi Arabia (UAE) fired about 60 Cheongung-II interceptor missiles in response to Iran's attack, and 96% of them succeeded in interception,'" and said, "Despite the stock price surge, the virtuous cycle that connects from orders to capital investment to earnings will work over the long term."