From SI to AX Specialist... Growth Prospects Open for LG CNS [Click e-Stock]

Securing Long-Term Growth Through Data Center Maintenance

Tapping Into New Revenue Streams in the Era of AI Transformation

LG CNS, once considered a leading systems integration (SI) company, is transforming its identity by securing new growth opportunities in the era of artificial intelligence (AI). While it continues to win next-generation financial system contracts as in the past, the company is now being recognized for capturing new revenue streams such as data center DBO (design, build, operate) projects and AI transformation (AX).

On June 30, Samsung Securities set a target price of 100,000 won for LG CNS and assigned a "Buy" investment rating, citing these factors. The previous day's closing price was 79,200 won.

Samsung Securities initiated coverage of LG CNS due to its entry into AI-based new businesses. As global demand for AI data centers expands, LG CNS is experiencing rapid growth in data center DBO orders. Overseas orders, including in Indonesia, are increasing thanks to collaboration with group affiliates such as LG Electronics and LG Uplus. The introduction of modular data centers, branded as the "AI Box," is also shortening construction times. LG CNS itself expects to generate 500 billion won in revenue from its data center business this year.

Its presence within the group is also growing. As LG Group positions AI transformation as a key driver of growth across the entire organization, LG CNS is expected to expand its role as a "control tower." The company is projected to see increased revenue across the entire AX process, including building group-wide AI infrastructure, establishing an agentic AI ecosystem, and introducing robots based on physical AI. Analysts also expect LG CNS to leverage group company references to expand external orders in the financial and public sectors.

Building next-generation systems, which used to be a core business for traditional SI companies, is still driving results. Despite sluggish performance in some affiliates, LG CNS is expected to achieve sales growth by winning next-generation financial sector projects, particularly from banks and securities firms. NH Nonghyup Bank's next-generation system "Project NEO" alone is said to be worth over 300 billion won for just the first phase, making it the largest single contract in the next-generation financial system business. In addition, LG CNS has secured major financial project references with Mirae Asset Life Insurance, Korea Securities Depository, and KB Securities. Based on this accumulated track record, the company is expected to expand its share of high-margin financial projects.

Donghwan Oh, a researcher at Samsung Securities, commented, "The business model is expanding from traditional SI to an AX partner that integrates infrastructure, agents, and robot transformation (RX)," adding, "It is time to revisit the company's valuation."

This content was produced with the assistance of AI translation services.