LIG Nex1 recorded an earnings surprise in the first quarter of this year, prompting securities firms to raise their target prices uniformly. The target price for LIG Nex1, which had remained in the 300,000 won range, sharply increased to the 400,000 won range.
LIG Nex1 reported sales of 907.6 billion won and operating profit of 113.6 billion won in the first quarter of this year. This marks a growth of 19% and 70%, respectively, compared to the same period last year. A noteworthy point in this performance is that it recorded a high profit margin of over 10% in the domestic market.
Jang Nam-hyeon, a researcher at Korea Investment Securities, noted, 'Domestic sales have surpassed the market estimate (consensus) by 73.3%, and the operating profit margin is believed to be over 10%. The operating profit margin for overseas business in the first quarter is also estimated to be higher, at 22%, compared to the previous consensus of 8.2%.'
Choi Jeong-hwan, a researcher at LS SECURITIES, analyzed, 'The recognition of settlement profits due to business closure occurred in the first quarter, and effects such as the reversal of provisions related to development appear to have positively impacted the profit margin. However, estimates suggest that labor costs were lower than anticipated despite numerous ongoing development projects, indicating that the positive effects will continue this year.'
Business towards the Middle East, including the United Arab Emirates (UAE) and Saudi Arabia, which have higher profit margins than the domestic market, is expected to pick up in the second half of the year. There are expectations that the proportion and profit margin of overseas business will further improve.
Jeong Dong-ik, a researcher at KB Securities, stated, 'At the end of the first quarter, the backlog of orders was recorded at 22.883 trillion won, significantly increasing compared to the end of last year. This includes 3.7 trillion won from the Cheongung export project won in Iraq, contributing to 4.2 trillion won in new orders recorded in the first quarter. This indicates 5.9 years of work against sales, which is expected to ensure stable performance growth in the future.'
Choi Kwang-sik, a researcher at DAOL Investment & Securities, mentioned, 'LIG Nex1 is confident in the margins for Cheongung exports to the Middle East, anticipating a period of performance growth beginning in the second half of next year when production ramp-up occurs.'
Regarding LIG Nex1's target stock price, DAOL Investment & Securities made a significant upward adjustment from 330,000 won to 490,000 won. iM Securities suggested a target price of 444,000 won, LS SECURITIES at 430,000 won, Korea Investment Securities at 420,000 won, and KB Securities at 410,000 won.