[Click eStock] "Lotte Information & Communication, Growth Becomes Visible but Earnings Lag... Target Price Down"

[Asia Economy Reporter Kwon Jaehee] Hi Investment & Securities maintained a 'Buy' rating on Lotte Information & Communication on the 29th, lowering the target price to 35,000 KRW.

Lotte Information & Communication recorded sluggish results in the first quarter with sales of 239.4 billion KRW and operating profit of 5.1 billion KRW. Although sales increased due to subsidiary consolidation, large-scale project execution, and data center operations, the increase in costs such as labor expenses and operating losses from newly consolidated subsidiaries were reflected.

Accordingly, Lotte Information & Communication's performance is also expected to be sluggish this year. Sales are projected at 1.0311 trillion KRW and operating profit at 40.8 billion KRW, as the increase in fixed costs and new investments is expected to outweigh the sales growth. Therefore, the key to improving profitability will be how much sales can increase in the coming quarters.

Although performance is weak, growth potential is becoming visible. Lotte Information & Communication is building a strategic mobility business value chain ranging from smart transportation infrastructure, including electric vehicle charging, next-generation intelligent transportation systems, and multi-lane Hi-Pass, to operation control and autonomous driving. In January this year, it acquired Jungang Control, an electric vehicle manufacturer, signaling the full-scale launch of its strategic mobility business. In July last year, it acquired Caliber, a VR specialist company that is a metaverse content expert. Lotte Information & Communication plans to provide major services offered by the Lotte Group, such as home appliances, food, home shopping, and cinema, within the metaverse platform, allowing users to experience them identically. Through this, synergy effects with group affiliates as well as external business expansion and global advancement are expected.

Lee Sangheon, a researcher at Hi Investment & Securities, analyzed, "Although Lotte Information & Communication's stock price has continued to be sluggish due to deteriorating performance, the acquisition of an electric vehicle charger company is expected to enable the strategic mobility business to be fully launched, from smart infrastructure to operation control and autonomous driving," adding, "The visibility of growth potential, such as building a metaverse ecosystem for group affiliates, is expected to act as a momentum for stock price increase."

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