KB Securities said on the 12th that LG CNS is expected to sustain growth as its cloud and AI businesses expand and the share of overseas sales continues to rise. The firm initiated coverage with a "Buy" rating and a target price of 90,000 won. The previous trading day's closing price of LG CNS was 65,400 won.
Kim Jun-seop, an analyst at KB Securities, said, "The cloud and AI business divisions account for 56% of total revenue and are growing at a rapid average annual pace of more than 15%," adding, "In 2026, with the full-fledged AI transition (AX) in manufacturing and the expansion of overseas data center operations, revenue is expected to grow to 4.35 trillion won."
LG CNS has the highest proportion of overseas sales among domestic IT service companies. As of 2024, LG CNS's overseas sales are 1.32 trillion won, accounting for 22% of total revenue.
Kim added, "Accompanying growth driven by the global expansion of LG Group affiliates, including the North American battery plant set to begin operations in 2026, is expected to accelerate," noting, "New (greenfield) market entries are gathering pace, including a data center in Indonesia, Smart City and electric-vehicle charging infrastructure in the United States, and an AI data center in Vietnam."
Kim also said LG CNS is overcoming the labor-intensive weakness of IT services through overseas development talent and an AI coding platform. The cost of sales ratio improved to 84.4% in 2024 from 85.3% in 2022, and is expected to improve further to 83.9% in 2026.
Kim continued, "An operating leverage effect is being created through the expansion of software revenue," adding, "Structural improvements to achieve the mid- to long-term target of a double-digit operating margin are becoming visible."
Kim projected LG CNS's revenue next year at 6.939 trillion won and operating profit at 696 billion won.