"LG CNS Posts Strong Performance... Targeting Physical AI Market Too" [Click e-Stock]

Growth in Both Revenue and Profit
Regulatory Easing and Strength in Physical AI Integrated Platform

LG CNS is one of the few IT service companies that has achieved simultaneous growth in both revenue and profit, while also improving its profit margin. The company’s diversified solutions and customer portfolio have been key factors in defending its performance amid market uncertainties.

On the 14th, LS Securities raised its target price for LG CNS by 5.5% to 96,000 won, citing these factors. The previous day's closing price was 73,500 won.

In the first quarter of this year, LG CNS recorded 1.315 trillion won in revenue and 94.2 billion won in operating profit, up 8.6% and 19.4%, respectively, compared to the same period last year. Not only are the results strong, but growth momentum has also been confirmed. In particular, the passage of the special act on Artificial Intelligence Data Centers (AIDC) by the National Assembly’s plenary session will simplify what had been a complex and lengthy data center licensing process. This is expected to accelerate market growth by removing obstacles that have made it difficult to build infrastructure in a timely manner, despite surging demand. LG CNS is also equipped with compact AIDC solutions that can respond to the need for rapid infrastructure deployment.

AI investment in the financial industry is also expected to expand. Last month, the Financial Services Commission eased regulations on cloud-based Software-as-a-Service (SaaS) for internal networks of financial companies, and it now plans to relax rules related to the adoption of generative AI and security solutions for internal networks. Additionally, system construction projects in the financial sector to prepare for the expansion of the virtual asset market are likely to become visible within the year.

The company also has the advantage of being able to secure a leading position in the integrated physical AI platform market. LG CNS has unveiled PhysicalWorks, an RX platform that supports end-to-end robot transformation for enterprises. Its key strength is that robots from different manufacturers can be trained and managed within the integrated platform. Based on its versatility and integrated services, the company aims to dominate the robot system integration (SI) market by connecting numerous hardware suppliers and customers.

Sun Yoo-jin, a researcher at LS Securities, stated, "The current share price is trading at a 12-month forward price-to-book ratio (PBR) of 2.1 times, which is above the historical PBR range average," adding, "Given that the sector PBR exceeded 2 times during previous periods of digital transformation and considering the potential of the physical AI platform, there is not a significant valuation burden at present."

Four types of robots trained with LG CNS' PhysicalWorks Forge autonomously collaborate based on PhysicalWorks Baton to perform tasks in logistics sites.

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