[Click eStock] "ITCenEntec Undervalued at PER 4.4x... Momentum from Fourth Internet-Only Bank Approval"

On May 21, independent research firm ValueFinder analyzed that despite the high growth of the cloud computing industry, ITCenEntec currently trades at a price-to-earnings ratio (PER) of only 4.4 times and holds momentum from the upcoming announcement of the preliminary approval for the fourth internet-only bank next month.

Lee Choongheon, a researcher at ValueFinder, stated, "The company, which was listed on KOSDAQ in 2000, is a system integration (SI) firm specializing in cloud-focused IT services within the ITCen Group." He added, "At the end of last year, the company relocated its headquarters to Gwacheon along with its affiliates and changed its corporate name. ITCen Group currently owns a total of 17 consolidated subsidiaries, including three listed companies such as ITCenCTS and ITCenPNS."

In the first quarter of this year, ITCenEntec posted consolidated sales of KRW 111.9 billion (up 64.6% year-on-year) and an operating loss of KRW 500 million. However, this was due to losses from subsidiaries. On a separate basis, the company achieved strong results with sales of KRW 60.3 billion (up 33% year-on-year) and operating profit of KRW 3.4 billion (up 2,473% year-on-year).

The strong performance is attributed to the operating leverage effect from increased demand for digital and cloud transformation by the government and local governments, as well as a rise in highly profitable private sector projects. Notably, the order backlog at the end of the first quarter reached KRW 140.5 billion, a significant increase of about 44% from KRW 97.7 billion in the previous quarter, raising expectations for future performance.

According to market research data, the domestic cloud computing market is expected to grow at a compound annual growth rate of 15.4%, from KRW 12 trillion in 2023 to KRW 24.6 trillion in 2028. Even without reflecting the sharp increase in order backlog in the first quarter, if ITCenEntec conservatively assumes similar performance to last year, its current PER remains at only 4.4 times. The company's cash and cash equivalents amount to KRW 53.4 billion, which exceeds its market capitalization as of the previous day.

Researcher Lee added, "The company is awaiting the selection of the operator for the fourth internet-only bank next month. It is part of Korea Soho Bank and is evaluated as being capable of stable financial support through its consortium, which includes several major commercial banks. This provides additional momentum related to the operator selection."