[Click eStock] "Lotte Jeongbotongsin, Most Undervalued in the Same Industry"

[Asia Economy Reporter Park Jihwan] Shinhan Financial Investment maintained a 'Buy' rating and a target price of 55,000 KRW for Lotte Information & Communication on the 5th, stating that it appears to be the most undervalued among global data companies.

Oh Kangho, Senior Researcher at Shinhan Financial Investment, explained, "The operation of a global data center responsible for the hub of Northeast Asia will begin this April," adding, "Facility installation and test operation are scheduled to start in mid-March, and the data center will operate 24 hours using equipment necessary for IT services such as servers, storage, and networks."

The global demand is steadily increasing due to the advent of the big data era and the expansion of security systems. This year, Lotte Information & Communication's data center sales are expected to grow by 19% year-on-year to 116.3 billion KRW. A total of four data centers, including those in Seoul and Yongin, will be operational. It is considered a time to focus on the leap from a company based on order performance within the existing group to a global network company.

Researcher Oh said, "Despite operating a global data center in Northeast Asia, it is the most undervalued within the peer group in the same industry." In 2021, the average price-to-earnings ratio (P/E) of the domestic peer group was about 28.7 times. In contrast, Lotte Information & Communication's P/E ratio based on this year's estimated performance is only 12.7 times, despite operating a global standalone data center this year.

Researcher Oh stated, "Steady performance growth is possible in the future through external growth via group orders and profitability improvement through data center operations," adding, "The growth momentum is sufficient with global data center operations, and expectations for additional center orders are also high."