[Click e-Stock] "LG CNS Expands Cloud and IT Services Businesses... Target Price Raised"

Shinyoung Securities Sets LG CNS Target Price at 110,000 Won

Shinyoung Securities said Tuesday that it was raising its target price for LG CNS from 90,000 won to 110,000 won and maintaining its “Buy” rating, citing the company’s growth prospects, including its plan to enter the GPU cloud business and the expansion of the IT services market.

In the third quarter, LG CNS posted revenue of 1.6643 trillion won, up 9% year on year, and operating profit of 138 billion won, up 15.0%, in line with market expectations. Revenue in the Digital Business Services (DBS) division rose 21% to 408.2 billion won, reflecting strong growth as external IT projects began contributing to sales. Revenue in the Cloud & Artificial Intelligence (AI) division reached 961.5 billion won, up 9%, while the Smart Engineering division posted revenue of 294.5 billion won, down 4%.

“The DBS division recorded strong revenue growth as next-generation system projects for financial institutions that it had previously won began generating substantial sales. Overseas financial services projects, including those in Singapore, also began contributing to revenue growth,” said Jung Wonseok, an analyst at Shinyoung Securities. “In the Cloud & AI division, increased cloud and AI usage by existing clients lifted revenue from cloud deployment and operations (MSP). Revenue from data centers that the company leases out also expanded as their utilization rates rose.” The Smart Engineering division’s results appear to have declined year on year due to a base effect following the completion of a North American project last year.

LG CNS’s plan to enter the GPU cloud business is expected to strengthen its competitiveness. LG CNS has announced that it will invest 381.4 billion won in GPU infrastructure to enter the GPU cloud business. “Given that demand from the group is assured, we believe the business offers high profitability relative to its risks. It could also help narrow the valuation discount compared with system integration (SI) competitors that already operate cloud infrastructure (CSP) businesses,” Jung said.

The expansion of the IT services market was also viewed as a positive factor. “In addition to building existing systems, clients are placing additional orders for AI agent projects,” Jung said. “We expect this to create growth opportunities for LG CNS, which has the largest portfolio of external project references in South Korea.”

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