[Edaily Reporter Shin Ha-yeon] Independent research firm ValueFinder noted that, as the global shortage of guided weapons continues to drive strong demand for Korean made systems, the momentum of the second defense upcycle is expected to spread down to the lower tiers of the supply chain over the medium to long term, and highlighted DYC(310870 KQ), the first component supplier in which LIG D&A (079550 KS) has taken an equity stake.

According to industry sources, annual U.S. production of PAC-3 family interceptors stands at around 600 rounds, implying at least three years to restore prewar inventories, while market research firm Fortune Business Insights projects the global market for ground based air defense systems to grow from USD 46.83 billion in 2026 to USD 91.27 billion by 2034, a CAGR of 8.7%. ValueFinder did not provide an investment rating or target price.

Founded in 2000 and listed on KOSDAQ in 2021, DYC is a precision machining company specializing in automotive powertrain components, supplying global automakers including Mercedes-Benz, BMW and Stellantis. Through DYC Dynamics, a wholly owned subsidiary acquired in 2025, the company produces guided weapon components such as fuze parts and components for missile attitude control systems (thrusters).

In May, DYC completed a KRW 2.0 billion private placement of new shares to LIG D&A, making LIG D&A its third largest shareholder with a 5.63% stake, and the entire proceeds are being invested in defense production facilities. On the earnings front, the start of mass production of 10 shaft types for BMW and higher volumes for Stellantis lifted 1H26 revenue to KRW 69.7 billion (+34.5% YoY) and operating profit to KRW 6.3 billion (+115% YoY).

“The key investment point for DYC is the interceptor replenishment cycle,” said Lee Choong Hun, analyst at ValueFinder. “Fuze and thruster components are consumables expended upon launch, so demand is directly proportional to annual missile production volumes. Because system deployments come first and interceptor orders follow with a time lag, current air defense system contracts serve as a leading indicator of future interceptor demand. With Cheongung II contracts with three Middle Eastern countries totaling approximately USD 9.3 billion, and LIG D&A‘s Cheongung II backlog in the Middle East alone reaching KRW 9.9 trillion, orders for consumable components should rise as the installed base expands.”

Lee added, “LIG D&A’s investment marks the first case of a guided weapons system integrator acquiring an equity stake in a component supplier. DYC Dynamics is currently operating at a 48% utilization rate, allowing it to nearly double output without the burden of capacity expansion, and plans to supply related components sequentially through 2030 based on existing contracts and delivery schedules. At a current P/E of around 4.5x, we believe the value of its defense business is not reflected at all.”