🍠 LIG D&A: Between Sanctions Review and a 1223 Billion-Won Drone Project - 2026.10.26

Hi, it’s Goguma 🍠 The key question today is how news of DAPA’s sanctions review could shake up the stock and orders. Let’s start lightly and then get into the heavier stuff.

What happened

First came news that the Defense Acquisition Program Administration (DAPA) had imposed a two-year restriction on bidding eligibility over allegations that an LIG Defense & Aerospace employee delivered a bribe ^[1]. MBC then reported that it had confirmed DAPA was also considering revoking the company’s designation as a defense contractor ^[7]. The Economist reported in a breaking news alert that a defense project worth 122.3 billion was at risk of falling through amid allegations of bribes worth hundreds of millions of won ^[2], and the stock fell more than 6% in early trading ^[3]. The company’s CEO denied involvement in the DAPA bribery allegations during a National Assembly Defense Committee audit ^[4]. So denials and a sanctions review are now playing out on the same stage.

The stock has already reacted

The price action looks pretty dramatic in a table. The stock started at a close of ₩580,000 on October 16 and rose to ₩592,000 on the 19th, then turned down to ₩542,000 on the 20th. On the 21st, trading volume surged to 580,255 shares as the stock sank to ₩496,500. The October 26 close was ₩427,000,, down 10.20%, with volume at 293,393. You could say the price has kept getting pressed down as the sanctions-related news has piled up. But these numbers don’t tell us how severe the sanctions are. They only show how heavily the market has taken the news.

Plenty of work, but the path is blocked

Here’s a question for you: who decides how quickly a backlog turns into actual money? Bloter noted that the company has an order backlog worth 24,600,000,000,000 KRW despite the bidding restriction, and that whether it can secure new contracts will be a key variable going forward ^[5]. The most painful point is the drone project. There are concerns that the disciplinary action could affect the contract for the 122,300,000,000 KRW-range drone project ^[1]. Put simply, it’s like having a warehouse packed with inventory but being unable to get clearance to ship it. A full warehouse and customers being able to buy the goods are two different things.

Meanwhile, the K-defense industry story has a somewhat different angle. It said that while export projects such as Cheongung-II are underway alongside development of next-generation weapon systems, a concentration of development costs in the second half could limit profit growth even if sales increase ^[6]. This is a separate question from the sanctions: how the company builds its long-term resilience.

Here’s where opinions diverge

I’ll sum up the four viewpoints this way. But I’m not going to force them into a consensus. In my view, what the market is focused on right now is the scope of the sanctions more than their severity. The bidding restriction was reported as a measure with a defined duration, but if it goes as far as revoking the company’s defense contractor designation, the situation changes completely ^[7]. That’s why both bullish and bearish scenarios remain in play. The bullish view is that the accumulated backlog will provide support; the bearish view is that if new contracts are blocked, the backlog will gradually lose its value over time. The articles available now don’t tell us which side is right. So I’ll leave this disagreement as it is.

Questions that remain open

Not much is settled yet. The final outcome of the sanctions review, the result of any legal response, how the CEO’s denial will be addressed in the proceedings, and when and at what scale new contracts might come are all still open questions. The biggest question is this: will the sanctions stop at a bidding restriction, or go as far as revoking the company’s designation? Only when we have that answer will we know how much of the backlog can hold up. That’s all for today. Next time, I’ll pick up only the new facts as they emerge. 🎯

📰 Reference News (6)

1

‘DAPA bribery allegations’: LIG faces heavy sanctions… Will it lose the 122.3 billion-won drone project? [Auto Team’s BizWatch]

네이버뉴스 · 2026.10.26

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2

[Breaking] LIG D&A’s 122.3 billion-won defense project at risk amid allegations of bribes worth hundreds of millions of won - The Economist

이코노미스트 · 2026.10.25

📰 View original

4

LIG D&A CEO denies involvement in ‘DAPA bribery’ allegations at National Assembly defense committee audit - Newsis

뉴시스 · 2026.10.26

📰 View original

6

K-defense industry: More work, but will profits follow? The winner in the individual battles

네이버뉴스 · 2026.10.26

📰 View original

📺 Reference Videos (1)

7

YouTube

[Exclusive] Additional sanctions for LIG over ‘defense industry corruption’… Review underway of ‘defense contractor designation revocation’ (2026.10.24/News Desk/MBC)

▶MBCNEWS·2026.10.24