Shinhan Investment Corp. raised the target price of Samsung SDS to 220,000 KRW, an increase of 10%, while maintaining a buy rating on the 5th.
Samsung SDS's sales last year decreased by 23% compared to the same period the previous year, and operating profit also declined by 12%. Logistics sales dropped by 36% year-on-year. Kangho Oh, a researcher at Shinhan Investment Corp., analyzed that the logistics performance was significantly impacted by the decline in freight prices.
Looking at 2023, despite poor performance, the stock price successfully rebounded. The stock return in 2023 increased by 41% compared to the beginning of the year. Shinhan Investment Corp. cited three main reasons for the rebound: 62% growth in cloud sales within IT services, development of generative AI solutions and future growth momentum, and expectations of a rebound in 2024 due to logistics stabilization. They forecast that further downward revisions in performance will be limited. In fact, the overall operating profit margin for 2023 succeeded in growing by 6.1%.
The growth momentum for 2024 lies in generative AI solutions. Attention should be paid to key products FabriX and Brity Copilot. It is expected that with the spread of AI trends in 2024, the demand for solution adoption by enterprises (B2B) will inevitably expand further.
The proportion of cloud sales within IT services in 2023 was 31%. It is expected to increase to about 35% in 2024. Cloud sales are estimated to grow by 24%, and if market penetration expands, performance growth is expected to accelerate further.
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