[Click eStock] "Lotte Information & Communication, Rising Expectations for Entry into Electric Vehicle and Metaverse Markets"

IBK Investment & Securities Report

[Asia Economy Reporter Minji Lee] IBK Investment & Securities on the 2nd issued a buy rating and a target price of 50,000 KRW for Lotte Information & Communication, citing high expectations for the electric vehicle infrastructure and metaverse markets through mergers and acquisitions.

Lotte Information & Communication recorded sales of 234.1 billion KRW and an operating profit of 14.2 billion KRW in the third quarter, growing 6% and 33.2% respectively compared to the same period last year. Although sales slightly missed the consensus by about 5%, operating profit exceeded expectations by 16%, showing strong performance.

Seunghoon Lee, a researcher at IBK Investment & Securities, explained, “The sales were influenced by the recognition of group orders such as Lotte Global Logistics’ smart logistics system and the Busan Osiria Theme Park IBS project,” adding, “External projects such as other companies’ online shopping malls and the advancement of integrated medical information systems contributed to year-on-year sales growth.” Sales in the SI division increased by 7.7% compared to last year, and operating leverage effects led to an operating profit margin of 5%, improving overall profitability.

Recently, the company has started to strongly drive future businesses through mergers and acquisitions. It acquired a 71% stake in Jungang Control, a company specializing in the manufacturing, sales, and installation of electric vehicle chargers, for 69 billion KRW. Jungang Control recorded sales of 43.8 billion KRW last year and is expected to exceed 70 billion KRW in sales next year. Since the scheduled acquisition date is January next year, it is expected to contribute to performance improvement. Jungang Control supplies chargers not only domestically but also to overseas markets such as Europe, and with sufficient latent demand from Lotte Group’s distribution and logistics sectors, leverage effects from scale growth are anticipated starting next year.

Expectations for entry into the metaverse market are also rising through the acquisition of Caliberus. This company has produced content such as Hyundai Motor’s VR promotional videos and Son Na-eun’s Star Date, based on patented VR content enabling two-way communication. Researcher Seunghoon Lee said, “Since the company is responsible for the group’s cloud services and has high technological competitiveness, it is expected to provide various services such as VR commerce and virtual offices in the future,” adding, “It will create diverse added value through affiliated companies’ online and offline commerce.”

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