[Click eStock] "Hangul and Computer, Cloud and AI Software Growth Expected... Target Price Up"

Shinhan Investment Corp. raised the target price for Hancom to 30,000 won from the previous 17,000 won on the 18th, stating that "the high growth of cloud and artificial intelligence (AI) software is expected to be highlighted." The buy rating was also maintained. The closing price on the previous day was 20,550 won.

On the same day, Shinhan Investment Corp.'s researcher Byunghwa Lee and analyst Jiwoo Baek stated, "After the sale of Hancom Lifecare, a non-core consolidated subsidiary, it is also possible to apply the price-to-earnings ratio (P/E) of global Software as a Service (SaaS) and software companies. There is sufficient upside potential."

They added, "Hancom's consolidated sales for the first quarter of this year are expected to be 50.8 billion won, and operating profit 4.6 billion won, representing increases of 21.6% and 89.7%, respectively, compared to the same period last year," and expressed expectations that "the trickle-down effect of cloud investment in the public sector will be confirmed through sales growth on a separate basis (an 11% increase compared to the same period last year)."

Along with the stable growth of on-premises (installed) version document software sales, cloud software growth is also being added. Researcher Lee explained, "As of last year, the cloud portion of separate sales was about 9.3%. The cloud sales ratio for the first quarter of this year is expected to exceed 20%." Additionally, "this year, separate sales are expected to reach 141.6 billion won, and operating profit 45.8 billion won, representing growth of 10.6% and 32.4%, respectively, compared to last year," adding that "'Hancom Office 2024'-based on-premises document software will continue stable growth in B2B (business-to-business), B2G (business-to-government), and B2C (business-to-consumer) markets."

With the full-scale cloud investment in the public sector, high growth of cloud software is expected. Researcher Lee said, "The sale of Hancom Lifecare has been formalized. Last year, the core business accounted for about 47.2% of consolidated sales," adding, "Upon sale, the core business ratio will increase to 82.7%." Furthermore, "This year, beta versions of 'Hancom Document QA' and 'Hancom Assistant' are also scheduled to be released, strengthening the cloud and AI lineup beyond Hancom Docs," and "About 35% of the public sector's cloud and AI infrastructure investment R&D budget is invested in software. Approximately 10% of the software budget will be reflected in Hancom's performance," he added.