LIG Defense&Aerospace (079550) Q3 2024 earnings summary

Executive summary

• LIG Nex1 is a leading defense system integrator specializing in advanced weapon systems and military-grade electronics, with a diversified portfolio across Army, Navy, and Air Force sectors.

• Sales for FY24 Q3 reached KRW 740.3 billion, up 38.1% year-over-year, with cumulative sales at KRW 2,108.5 billion, a 29.5% increase.

• Operating income for Q3 was KRW 51.9 billion, up 26.5% year-over-year; cumulative operating income rose 12.4%.

• Net income for Q3 was KRW 40.7 billion, up 20.3% year-over-year; cumulative net income increased 17.4%.

• Core competencies include strong R&D capabilities, with 58.7% of employees in R&D and nearly half holding advanced degrees.

Financial highlights

• FY2024 3Q sales reached KRW 2,108.5 billion (accumulative), with operating income at KRW 168.1 billion and net income at KRW 147.0 billion.

• EBITDA for FY2024 3Q accumulative was KRW 230.5 billion.

• Gross profit for FY2024 3Q accumulative was KRW 306.6 billion, with COGS at KRW 1,802.0 billion.

• Total assets increased to KRW 5,804.2 billion as of FY2024 3Q, with equity at KRW 1,172.0 billion.

• Domestic sales accounted for 79.8% of Q3 sales, while overseas sales grew 2.9% year-over-year, driven by Indonesian and Middle Eastern contracts.

Outlook and guidance

• Order backlog stands at approximately KRW 19.6 trillion as of Dec. 2023, about 8.5 times FY23 sales, supporting stable growth.

• More than 50% of the backlog is export-related, with expectations to maintain a backlog 3–4 times annual sales over the next five years.

• Domestic growth is supported by a rising Force Improvement Program budget, with company sales representing over 10% of this budget in 2023.

• Overseas market opportunities are expanding due to heightened geopolitical tensions and global military modernization.

• Order backlog at end of Q3: KRW 18.39 trillion, down KRW 614.9 billion sequentially.