"Hancom Named Top Pick for the Sovereign AI Era... Target Price Lowered [Click eStock]"

Shinhan Investment Lowers Target Price but Maintains "Buy" Rating

On August 25, Shinhan Investment Corp. maintained its "Buy" rating for Hancom, widely known for its "Hangul" software, but lowered the target price by 27.1% from 35,000 won to 25,500 won. This represents a potential upside of 48.0% compared to the closing price of 17,230 won on August 24. While the target price was revised down by conservatively reassessing the performance of key consolidated subsidiaries, the company evaluated that expectations for improved earnings in the second half remain valid, driven by the expansion of its artificial intelligence (AI) transformation business.

Hancom Headquarters Exterior View

Byeonghwa Lee, an analyst at Shinhan Investment Corp., selected Hancom as the "top pick in the era of sovereign AI," referring to AI built on domestic infrastructure by governments or enterprises without reliance on foreign technology. Hancom’s AI new business revenue share is projected to rise annually—from 33.5% last year, to 44.1% this year, and 47.4% next year. Revenue from on-premises sales in the public sector remains solid, while the AX (AI transformation) business, which combines web office software and hardware, is now emerging as a new growth engine.

Improvement in second-half results is expected to be significant. Lee forecast that Hancom’s standalone revenue in the second half will increase by 33.1% year-on-year to 111 billion won, with operating profit soaring 95.6% to 32.4 billion won. While AI investment in the public sector was delayed in the first half, performance is expected to improve sharply as related projects are concentrated in the second half. In fact, the proportion of Hancom’s customer base adopting AI packages rose to 6.2% in the second quarter, up 2.0 percentage points from the previous quarter. The share of revenue from new businesses such as AX and hardware in the second half is projected to reach 53.7%, up 12.7 percentage points year-on-year, with overall revenue expected to grow by 42.8%.

Lee diagnosed that investment sentiment, which had contracted in the first half due to concerns over AI software, has recently begun to recover. He stated, “The second half, marked by a favorable policy environment and accelerated AI transformation among major clients, is the time to reconfirm Hancom’s core growth potential. As earnings visibility improves, there is ample possibility for a valuation re-rating.”

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