[Click eStock] "Hangul and Computer, Full-Scale Expansion of New Business... Target Price Lowered by 8%"

IBK Investment & Securities Report

[Asia Economy Reporter Minji Lee] IBK Investment & Securities maintained its buy rating on Hancom and lowered the target price by 8% to 34,000 KRW on the 24th.

Hancom announced a contract to transfer 32.3% of its stake in Hancom MDS for 105 billion KRW (with a deposit of 20 billion KRW). The sale proceeds will be used for investments and acquisitions related to global SaaS and space business data-based service industries. Accordingly, new businesses such as satellites, metaverse, and Amazon are expected to be actively pursued.

First, on the 26th (U.S. time 25th), the private satellite Sejong 1 will be launched via SpaceX. Three satellites will be launched next year, and up to the 5th satellite in 2024, with plans to launch more than 50 satellites within five years.

The expansion of the metaverse business is also expected to accelerate. Earlier, the company launched CyTown, linked with Cyworld, at the end of May. Seunghoon Lee, a researcher at IBK Investment & Securities, said, “Various forms of metaverse projects are planned,” adding, “Amazon and office businesses are also expected to proceed within the first half of the year, so the momentum for new businesses will continue through the second half.”

Meanwhile, the company recorded consolidated sales of 90 billion KRW and operating profit of 7 billion KRW in the first quarter. This represents a 0.4% increase and a 47.3% decrease, respectively, compared to the same period last year. While the headquarters and Hancom MDS showed favorable performance, Hancom Lifecare’s results significantly declined. The headquarters’ separate sales and operating profit grew by 15.2% and 8.8% year-on-year, respectively, but Hancom Lifecare’s sales and operating profit decreased by 32.4% and 194.3%, respectively.

Researcher Lee explained, “Sales increased as public institutions transitioned to the cloud, achieving the highest quarterly sales ever, but Hancom Lifecare’s performance worsened due to sluggish quarantine business and some delayed sales.”

However, a short-term stock price increase is expected to be difficult because the results of new businesses are unlikely to appear quickly. Lee said, “Since these areas have high potential for growth, they will drive the stock price up in the long term,” adding, “The headquarters’ office sales combined with the cloud business will improve performance every quarter.”