[Edaily Reporter Shin Ha-yeon ] On the 18th, independent research firm Value Finder assessed that SsangYong Information & Communications(010280)has taken a step forward in its earnings resilience as the profitability of its core business has improved and its subsidiary, IT Sencloit, has returned to profitability. The analysis indicates that the stock is extremely undervalued, with a price-to-earnings ratio (P/E ratio) of just 1.7 times based on the combined net income for the last four quarters. No investment recommendation or target price was provided.

Jeon Woo-bin, an analyst at Value Finder, stated, “Cumulative operating profit for the past four quarters was 35.3 billion won, and net profit was 42.7 billion won, resulting in a price-to-earnings ratio (PER) of just 1.7 times based on the closing price on the 14th.” He added, “Considering the seasonal trend of concentrated public IT project orders in the second half of the year, we believe there is a high probability that the company will set a new record for earnings this year.”

ITCENENTEC’s second-quarter consolidated revenue rose 8.6% year-over-year to 138.8 billion won, while operating profit surged 469% to 8.3 billion won. For the first half of the year, cumulative revenue increased 14.6% to 274.7 billion won, and operating profit soared 1,563% to 15.3 billion won. Net income reached 16.4 billion won, marking a return to profitability.

In particular, the improvement in core business profitability was notable. On a standalone basis for the first half of the year, revenue rose 17.4% year-over-year to 157.2 billion won, while operating profit increased 78.6% to 13.3 billion won. The operating profit margin rose to 8.5%.

Research Analyst Jeon explained, “We have confirmed that selectively winning high-margin projects and enhancing development productivity through AI are translating into cost competitiveness.”

He also gave a positive assessment of the turnaround at subsidiary IT Sencloit, which had previously been a drag on the company’s performance. IT Sencloit, which posted a net loss of 6.9 billion won in the first half of last year, returned to profitability in the first half of this year with a net profit of 2.1 billion won.

By business segment, the IT Services division’s operating profit turned from a 2.5 billion won loss in the first half of last year to a 14.7 billion won profit in the first half of this year. Revenue in the Cloud division rose 21.8% year-over-year to 96.7 billion won, accounting for 35.2% of total company revenue. Looking at the trend in revenue share by segment on page 2 of the report, the cloud segment’s share has been steadily rising—from 13.2% in 2023 to 28.3% in 2024, 32.8% last year, and 35.1% in the first half of this year.

The Artificial Intelligence Transformation (AX) business entered a temporary lull following the completion of a major project. Standalone AX revenue for the first half totaled 2.2 billion won, down from 15.4 billion won in the previous year, when the company was building a 52.6 billion won “AI-customized teaching and learning platform and academic proficiency assessment system.”

However, ValueFinder assessed that the company’s AX business capabilities are steadily growing. “IntelliSen Code,” a development solution based on the company’s proprietary small language model (sLLM), was applied to more than 10 projects in the public and financial sectors during the first half of the year, and “AgentGO,” the Agent AI platform operated by a subsidiary, is expanding its track record into the pharmaceutical, manufacturing, and financial sectors.

In June, the company acquired the public cloud business division of IT Sencloit, consolidating its AX and cloud transformation (CX) capabilities at the headquarters. It also secured long-term contracts this year, including a 15.3 billion won contract for the maintenance of the judiciary’s data center in January and a 47.9 billion won contract for the integrated maintenance and management of information systems in June.

The order backlog is also growing. As of the first half of this year, ITCENENTEC’s order backlog stood at 152.2 billion won, marking the highest level since 2022.

Researcher Jeon added, “Since baseline earnings are secured through long-term contracts, whether the company secures follow-up large-scale projects from the public-sector AX tenders concentrated in the second half of the year is expected to determine next year’s profit levels.”