LIG Defence & Aerospace Co Ltd. | Asia Pacific Upgrade to OW

Research evidence excerpt

LIG Defence & Aerospace Co Ltd. | Asia Pacific Upgrade to OW

IdeaMActive deterrence set to push demand for offensive missiles higher

We believe that the ongoing the Middle East conflict amid rising global geopolitical risks

are making active deterrence even more important to countries. For active deterrence,

there is a need to possess military capabilities that have the ability to reach long distances

with effective firepower. Considering this, we think offensive missiles are likely to be

where demand is stronger than market expectations.

Furthermore, many military analysts generally expect offensive missiles to become more

numerous, more autonomous, more precise, and harder to defend against, rather than

being replaced by another more dominant weapon. Some of the prevailing trends that are

expected related to offensive missiles are:

• Larger number of relatively affordable missiles to complement more high-end

precision missiles;

• Coordinated attacks using multiple systems, including missiles and drones;

• Hypersonic systems to increase, but conventional missile systems to remain;

• Incorporation of AI for greater autonomy.

As we see more offensive missile systems being deployed, this should lead to countries

needing to bolster up their air defense systems to counter offensive missile build-up.

Europe offers a potential market, but localization remains key

According to the International Institute for Strategic Studies (IISS), Europe’s air- and

missile-defence shortfall is most acute in medium- and long-range ballistic-missiles. Our

European defense analyst has analyzed that Europe’s air defence and missile capabilities

are heavily reliant on US suppliers, particularly for medium- and long-range, with ~65% of

systems and interceptors in inventories sourced from the US.