Yuanta Securities Korea analyzed on the 24th that if future bills related to stablecoins and security token offerings (STOs) are passed, there would be benefits as an infrastructure provider. The investment opinion remains 'buy,' and the target stock price has been raised to 84,600 won. The closing price of LG CNS the previous day was 69,800 won.
Yuanta Securities Korea analyzed that LG CNS's stock price is currently adjusting after rising due to expectations of benefits related to stablecoins.
Lee Chang-young, a researcher at Yuanta Securities Korea, stated, 'LG CNS is the only domestic company involved in the establishment and development of Central Bank Digital Currency (CBDC) and has experience in building financial platforms with banks, card companies, payment gateway companies, and simplified payment providers, as well as experience in building STO platforms.' He also noted that if future bills related to stablecoins and STOs are passed, there would be benefits as an infrastructure provider.
Additionally, he analyzed that the experiences in building and operating data centers accumulated as the number one managed service provider (MSP) in Korea and experiences in developing and constructing large-scale language models (LLM) suggest high potential benefits related to the government's upcoming investments in sovereign AI expansion. The researcher added, 'This leads to a judgment that LG CNS's performance and valuation may rise.'
The researcher predicts that LG CNS's second-quarter performance will show sales of 1.4602 trillion won and operating profit of 140.8 billion won, representing increases of 0.7% and 2.3%, respectively, compared to the same period last year.
The researcher analyzed that 'captive revenue decreased and business delays from domestic and foreign clients, along with the completion of large projects, led to a decline compared to last year, but overall growth continued as cloud and artificial intelligence (AI) construction projects expanded.'
He forecasted that high growth would continue or sales would recover by institutional sector in the second half of the year.
The researcher noted, 'In the cloud & AI sector, high growth is expected to continue in the second half of the year with the securing of AI contracts from public institutions such as the Ministry of Foreign Affairs and the Gyeonggi Provincial Office of Education, and the expansion of security platform projects. Smart engineering faces concerns about decreasing captive revenue, but sales are increasing for LG Electronics, LG Energy Solution, and LG Innotek.'
As a result, it is expected that captive revenue will recover due to the full-scale implementation of battery new installation projects, and that non-captive orders will increase sevenfold compared to last year, allowing sales to recover in the second half of the year. Regarding the DBS sector, it is expected that sales will recover in the second half due to the full-scale development of next-generation financial systems secured in the first half, along with the expansion of global financial business in Japan and Southeast Asia and an increase in sales for application outsourcing (AO) projects.