[Click eStock] "Lotte Innovate, Focus on Subsidiary Growth and Lotte Group's AI Transition"
Target Price Newly Set at 38,000 KRW
EVISYS and Colorbus, New Growth Engines
Lotte Group's AI Transformation, Large Order Volume Expected
Sangsangin Securities highlighted the growth potential of Lotte Innovate's subsidiaries and Lotte Group's artificial intelligence (AI) transformation on the 13th. They newly issued a 'Buy' investment rating with a target price of 38,000 KRW. The previous closing price of Lotte Innovate was 38,000 KRW.
![[Click eStock] "Lotte Innovate, Focus on Subsidiary Growth and Lotte Group's AI Transition"](http://www.asiae.co.kr/news/img_view.htm?img=2024061307454714705_1718232347.jpg)
Choi Seung-ho, a researcher at Sangsangin Securities, stated, "The target price was set by applying a target price-to-earnings ratio (PER) of 12 times to the estimated 2024 earnings per share (EPS)." He added, "Lotte Innovate is a system integration (SI) company growing due to the acceleration of Lotte Group's digital transformation."
Lotte Innovate's five-year average sales growth rate is 11%. Sales for 2024 are projected at 1.3085 trillion KRW, with operating profit expected to reach 58.7 billion KRW. AI transformation and subsidiaries such as EVsis, an electric vehicle charging company, and Colorverse, a metaverse company, are new growth drivers. EVsis recorded sales of 80.4 billion KRW and an operating loss of 2.6 billion KRW in 2023. With entry into the North American market in 2025, sales are expected to reach 223.2 billion KRW and operating profit 10 billion KRW, turning profitable. Colorverse plans to launch its metaverse platform in August.
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Lotte Group has made AI transformation a key agenda, and Lotte Innovate anticipates a large volume of orders due to increased AI demand within the group. Researcher Choi said, "Lotte Innovate's PER is currently around 8 times, representing a low entry point." He added, "The company plans to efficiently utilize data within the group based on AI models, and Lotte Innovate is expected to grow after 2024 with increased orders related to AI transformation and electric vehicles."
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