LIG D&A and Rheinmetall Form Strategic Partnership for European Air-Defence Market
On 15 June, LIG D&A and Germany's Rheinmetall officially announced a strategic partnership targeting the European and NATO air-defence market. The two companies have set the near-term establishment of a joint venture (JV), in which Rheinmetall will hold a majority stake, as their primary objective.
In a note published on 17 June, Eugene Investment & Securities estimated that, under conservative assumptions and based on a requirement for 50 additional battery units, the partnership could open a market worth as much as 160 trillion won — comprising approximately 70 trillion won for the battery systems themselves and 90 trillion won for interceptor missiles.
Structure of the Collaboration
The partnership is structured to combine Rheinmetall's very short-range air-defence (VSHORAD) capabilities with LIG D&A's medium- and long-range air-defence (MRAD/LRAD) missile systems. LIG D&A's medium- and long-range systems will undergo localisation, upgrades, and marketing within Europe, while in the short-range air-defence (SHORAD) segment, the two companies will co-develop new missiles.
The Scale of Europe's Air-Defence Requirement
The potential size of the European air-defence market is substantial. The Kiel Institute for the World Economy, a German think-tank, estimates that 89 battery units are needed for adequate European defence, putting total procurement costs at 300 billion euros (approximately 500 trillion won). At present, only roughly 40 batteries have been deployed across Europe.
Demand for interceptor missiles could reach 2,000 rounds annually, according to analysts. The Center for Strategic and International Studies (CSIS) estimates that Russia is currently producing 800 to 1,000 ballistic missiles per year.
Limited European Alternatives in Medium- and Long-Range Defence
Europe's options for medium- and long-range air defence capable of intercepting ballistic missiles are narrow. The field is essentially limited to the Patriot system, THAAD (Terminal High Altitude Area Defense), and the SAMP/T family. US-made systems face growing inventory constraints and delivery uncertainties owing to demand from Middle Eastern conflicts. The next-generation SAMP/T NG remains at an early stage of operational deployment.
Hanwha Also Pursues European Opportunities
Hanwha Aerospace and Hanwha Systems are separately advancing their own European strategies. Hanwha Aerospace is actively marketing its L-SAM (Long-range Surface-to-Air Missile) system to Poland, Switzerland, and Germany, while Hanwha Systems is pursuing the integration of its MFR (Multi-Function Radar) with Germany's Diehl Defence.
Investment View
Eugene Investment & Securities maintains an Overweight recommendation on the defence sector. The brokerage has raised its target price for LIG D&A to 1,200,000 won, while keeping its target prices for Hanwha Aerospace at 1,860,000 won and Hanwha Systems at 140,000 won unchanged.