[Click e-Stock] "LG CNS, Cloud Growth is Key... Target Price Raised"

On July 24, Shinhan Investment & Securities raised its target price for LG CNS by 8% to 84,000 won, citing accelerated cloud growth.

In the second quarter of this year, LG CNS's cloud business drove the company's overall performance. Revenue reached 1.4602 trillion won and operating profit was 140.8 billion won, representing year-on-year increases of 0.7% and 2.3%, respectively. For the first half of the year, revenue rose 6.0% year-on-year to 2.6715 trillion won, while operating profit grew 29.2% to 219.7 billion won.

Oh Kangho, a researcher at Shinhan Investment & Securities, stated, "By business division, cloud & AI revenue increased by 8%, driving overall growth." He added, "The key takeaways from these results are: growth in cloud & AI performance, improved profitability, expansion of the client base, and entry into the non-captive market?all of which are positive factors."

Researcher Oh expects LG CNS to continue delivering strong results in the second half of the year, driven by cloud growth.

He commented, "Due to the nature of the industry, expectations for stepwise earnings growth have increased, and we believe the company is entering a phase of accelerated cloud growth. As a leading domestic IT services provider, LG CNS could also see a revaluation of its valuation if it demonstrates sustained cloud growth."

He continued, "We are raising our target price by 8% to 84,000 won, and increasing our EPS (earnings per share) estimate by 3% and our valuation by 4%. However, while cloud growth is positive, we are applying a 10% discount compared to the industry average due to declining revenue in key business areas."