Photo = Samsung SDS

 

[Alpha Biz= Kim Jisun] On Monday, iM Securities maintained its 'Buy' rating for Samsung SDS but revised its target price downward from KRW 200,000 to KRW 167,000. The revision reflects concerns over a slowdown in its System Integration (SI) and IT Outsourcing (ITO) businesses, despite strong growth in its cloud business. The stock's last closing price was KRW 127,800.

For the fourth quarter, iM Securities forecasts Samsung SDS will achieve sales of KRW 3.6303 trillion, up 7.5% year-on-year, and operating profit of KRW 246.7 billion, an increase of 15.0%.

The firm explained, “While the cloud business within the IT services segment is expected to maintain high growth, SI and ITO revenues are likely to be subdued despite being in a peak season. This is due to captive clients’ focus on efficient investment strategies. Furthermore, rising solution costs could weigh on operating profit growth within the IT services segment.”

Looking ahead, iM Securities projects Samsung SDS's 2024 sales to rise by 6.1% year-on-year to KRW 14.6636 trillion, with operating profit increasing by 10.0% to KRW 1.0413 trillion.

Strong Growth in Cloud Business Expected
The cloud business is anticipated to maintain over 20% growth in revenue year-on-year for 2024.

iM Securities noted, “In the MSP (Managed Service Provider) segment, we expect increased revenue from cloud migration and deployment in the financial and manufacturing sectors, as well as growth in building generative AI platforms like Fabrics for enterprise customers. Additionally, in the CSP (Cloud Service Provider) segment, higher service usage is expected to expand HPC (High-Performance Computing) revenue, along with increased GPUaaS offerings for generative AI needs.”

 

 

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