"LG CNS Benefits from Data Center Business, Target Price Raised" [Click e-Stock]

Hanwha Investment & Securities Raises Target Price from 90,000 Won to 100,000 Won

On September 1, Hanwha Investment & Securities maintained its "Buy" investment rating on LG CNS and raised its target price from 90,000 won to 100,000 won.

Sohye Kim, a research analyst at Hanwha Investment & Securities, stated, "LG CNS is expected to benefit from increased domestic data center investment through its Design, Build, and Operate (DBO) business, even without large-scale investments in graphics processing units (GPUs). Next-generation Financial Digital Transformation (DX) and robotics businesses are also expected to gain momentum in the second half of the year," she added.

Kim explained that LG CNS is structurally positioned to benefit as the number of domestic data centers increases, since it can secure early demand for DBO as more external operators invest in data centers. In particular, the company’s hyperscale references secured in Samsong and Jukjeon, as well as its first overseas artificial intelligence (AI) data center project in Indonesia, are likely to serve as additional barriers to entry for both domestic and international DBO orders. "While significant short-term performance momentum is not expected, in the mid- to long-term, the accumulation of operations, MSP, and AI services is likely to reveal operational leverage from recurring revenue," she said.

The business supporting short-term results is the financial DX sector. Kim believes the Financial DX business may begin to contribute to earnings from the second half of the year, bolstered by recently secured large projects such as a major contract with NongHyup Bank. Although the robotics business currently accounts for a small portion of results, it is noteworthy that it has entered the commercialization phase.

Kim continued, "Performance growth momentum is expected to be stronger in the years following the second half of this year. As data center operations and cloud revenue accumulate and new DBO orders are added, the valuation multiple, which has remained limited within a narrow range, is also expected to rise gradually," she said.

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