[Click eStock] "Lotte Data Communication, Expected to Benefit from Government Digital New Deal and Group Digital Investments"

[Asia Economy Reporter Eunmo Koo] An analysis suggests that Lotte Data Communication will benefit starting next year from the government's Digital New Deal projects and the group's intensified digital investments.

IBK Investment & Securities estimates that Lotte Data Communication's third-quarter revenue will reach 220.5 billion KRW, a 7.5% increase compared to the same period last year, and operating profit will grow by 92.9% to 10.6 billion KRW. Researcher Seunghoon Lee of IBK Investment & Securities explained in a report on the 19th, “The top line grew year-on-year due to increased overseas business sales and rising investments to strengthen the group's digital competitiveness, while cost control on labor and outsourcing expenses focused on improving profitability.”

He added, “Although operating profit falls short of the consensus estimate (11.5 billion KRW), even considering the approximately 4 billion KRW cost related to the Hyundai Information Technology merger excluded last year, it still grew year-on-year. Despite Lotte Group affiliates experiencing performance slowdowns due to COVID-19, the group-wide expansion of digital transformation investments is believed to have driven Lotte Data Communication's growth.” Lee further noted, “If Lotte Group's performance recovers in the future, Lotte Data Communication's performance improvement will accelerate.”

Starting next year, benefits from the government's Digital New Deal projects and the group's digital transformation strategies are expected to materialize in earnest. Lee stated, “Since Lotte Group holds the largest-scale retail big data, new orders from the government's Data Dam project are anticipated.” The government plans to invest approximately 18 trillion KRW in expanding sector-specific big data platforms, opening public data, and building AI training data. Additionally, “As its subsidiary Hyundai Information Technology possesses top-level competitiveness in telecommunications and railway company MIS businesses domestically, new orders are expected in SOC digitalization and eco-friendly mobility sectors,” he analyzed.

Meanwhile, investments to strengthen digital competitiveness within Lotte Group are believed to be ongoing. Lee explained, “IT resources that were previously dispersed within the group are being reorganized around Lotte Data Communication, which plays a central role in the group's digital transformation projects. It has already secured the cloud system construction and IT service business for ‘LotteON’ and currently operates three data centers generating about 100 billion KRW in revenue.” With the completion of the fourth center by the end of this year, an additional revenue of approximately 9 billion KRW is expected next year, increasing to about 30 billion KRW by 2025.

This content was produced with the assistance of AI translation services.