[Click e-Stock] "LG CNS: Cloud and AI Account for 60%... Profitability Continues to Improve"

SK Securities predicted that LG CNS will continue to show solid growth, driven by its cloud and artificial intelligence (AI) businesses. The company set a target price of 80,000 KRW and maintained a "Buy" investment rating.

Nam Hyoji, a researcher at SK Securities, stated, "The core growth drivers for LG CNS are the expansion of its cloud and AI businesses." She added, "Cloud and AI revenue in 2025 is expected to reach 3.8 trillion KRW, up 13.2% year-on-year, and is projected to maintain strong growth in 2026, reaching 4.3 trillion KRW, an increase of 13.7%."

Nam explained, "The acceleration of cloud migration in the public sector and increased AI investment by private companies are driving demand." She continued, "In the AI segment, LG CNS is securing AX projects not only from affiliates but also from external companies by leveraging its proprietary LLM and AgenticWorks, among other solutions."

She also noted, "The smart engineering division is expected to recover in 2026, thanks to a rebound in demand from group affiliates and the acquisition of new non-captive customers in sectors such as shipbuilding and defense." She added, "LG CNS is expanding overseas, including in North America and Europe, based on its proven automation solutions in Korea. We forecast 2026 revenue at 6.8 trillion KRW (up 7.2%) and operating profit at 645.2 billion KRW (up 16.1%)."

Nam set the target price for LG CNS at 80,000 KRW. She explained, "The recent share price has adjusted to a level similar to the IPO price following a block deal by Crystal Korea. While the possibility of additional share sales remains a concern, once the lock-up period ends and the overhang is resolved, we expect LG CNS to enter a full-fledged re-rating phase."

She added, "The current share price does not fully reflect the growth potential of the cloud and AI businesses or the earnings momentum from the recovery in group affiliate investments, making this an opportune time to take a medium- to long-term buying approach."

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