[Click e-Stock] "Samsung SDS to Benefit from Accelerated Cloud Adoption in Public Sector"

On June 24, Korea Investment & Securities raised its target price for Samsung SDS from 180,000 won to 230,000 won, citing a positive shift in market conditions, including the acceleration of cloud adoption by public institutions and increased investment in artificial intelligence (AI).

For the second quarter of this year, Samsung SDS is expected to post sales of 3.51 trillion won (up 4.4% year-on-year) and operating profit of 234.7 billion won (up 6.3%), in line with market expectations for operating profit of 236.1 billion won. While SI and ITO (IT outsourcing) sales are projected at 241 billion won (down 10.0%) and 779.4 billion won (up 2.2%), respectively, reflecting modest growth, cloud sales are expected to reach 695.7 billion won (up 25.1%), slightly exceeding market expectations.

Jung Hoyoon, a researcher at Korea Investment & Securities, stated, "Since 2024, financial and public institutions have begun transitioning to the cloud, and order volumes related to the construction of cloud-native systems by major public institutions such as the Ministry of the Interior and Safety and the Supreme Court are expected to continue increasing." He also assessed, "The rapid increase in demand for GPUs due to greater AI utilization is another positive factor." Currently, the utilization rates of all five SDS data centers are rising, and additional growth in CSP (cloud service provider) revenue is anticipated once GPUs are installed and operations begin at the West Wing of the Dongtan Data Center in the second half of the year.

Jung further noted, "Cloud adoption by both public institutions and private companies in Korea will accelerate, and especially, demand for GPUs will rise on both fronts, aligning with global cloud market trends." He emphasized, "It is a time when the company must respond swiftly to rapidly changing market conditions."

Expansion of shareholder returns is also a key investment point for the second half of the year and beyond. Jung explained, "Samsung SDS plans to increase shareholder returns and investments so that its ROE (return on equity), currently around 8%, can be raised to 12%."