[Edaily Reporter Shin Ha-yeon ] On the 8th, HANWHA INVESTMENT & SECURITIES projected that SAMSUNG SDS CO., LTD.(018260)will see a significant acceleration in earnings growth starting next year, driven by continued growth in its cloud business, an increase in orders related to artificial intelligence (AI) infrastructure, and the launch of new data centers. The firm expects the company to post earnings slightly above market expectations in the second half of the year, buoyed by rising utilization rates for its Graphics Processing Unit as a Service (GPUaaS). It maintained its “Buy” rating and target price of 300,000 won.

Kim So-hye, an analyst at HANWHA INVESTMENT & SECURITIES, stated, “Earnings for the second half are expected to slightly exceed market expectations as GPUaaS utilization rates rise, and growth is projected to accelerate further starting next year with the launch of new data centers.”

The firm estimated SAMSUNG SDS CO., LTD.’s consolidated revenue for the third quarter of this year at 3.711 trillion won and operating profit at 240.9 billion won. Revenue is expected to increase by 9.4% year-over-year, and operating profit by 3.7%, in line with market consensus. The operating profit margin is projected to rise by 0.3 percentage points from the previous quarter to 6.5%.

By business segment, IT services revenue is forecast to reach 1.716 trillion won, a 7.5% increase year-over-year. In particular, cloud revenue is estimated to rise 18.3% to 798 billion won. This is attributed to the resumption of delayed projects and the accelerated expansion of the Managed Service Provider (MSP) business both domestically and internationally.

Analyst Kim explained, “While cloud revenue continues to show strong growth, the logistics business appears to be performing better than expected,” adding, “We expect cloud revenue to increase by 18.3% as delayed projects have resumed and the domestic and international expansion of the MSP business has accelerated.”

The logistics business is also expected to show better-than-expected performance. Third-quarter revenue from logistics business process outsourcing (BPO) is estimated at 1.995 trillion won, an 11.1% increase year-over-year. The analysis attributes this improvement in performance to expanded revenue from external clients and rising freight rates.

Profitability is also expected to remain stable. Third-quarter operating profit for the IT services division is projected at 207 billion won, while the logistics division is expected to post 34 billion won. The operating profit margins for each business are forecast at 12.1% and 1.7%, respectively, representing increases of 0.5 percentage points and 0.2 percentage points compared to the previous quarter.

Analyst Kim stated, “We estimate that logistics revenue grew 11.1% year-over-year, largely driven by the expansion of external sales and rising freight rates,” adding, “We do not anticipate any significant cost-related issues.”

For the fourth quarter, the firm projected that profit growth would accelerate as the peak season effect for the cloud business is fully reflected. HANWHA INVESTMENT & SECURITIES forecast fourth-quarter revenue of 3.766 trillion won, up 6.5% year-over-year, and operating profit of 276.2 billion won, a 22.2% increase. The operating profit margin is estimated to rise to 7.3%, up 0.8 percentage points from the third quarter.

In particular, the firm forecast that growth momentum in both the Cloud Service Provider (CSP) and Managed Service Provider (MSP) businesses would strengthen compared to the previous quarter. Fourth-quarter cloud revenue is expected to reach 831 billion won, a 20.9% increase year-over-year. This growth is driven by a combination of stable demand from existing affiliates and expanding revenue from external customers.

Analyst Kim explained, “We expect the profit growth trend to strengthen in the fourth quarter as the peak season effect for the cloud business is fully reflected,” adding, “It is highly likely that growth in both the CSP and MSP businesses will accelerate compared to the previous quarter.”

He also highlighted the growth potential of the AI infrastructure business. SAMSUNG SDS CO., LTD. has recently been rapidly expanding its order intake related to external cloud and AI infrastructure. Analysts assess that the company is securing mid- to long-term growth momentum by broadening its external customer base and moving away from a business structure centered on existing group affiliates.

Analyst Kim noted, “With orders related to external cloud and AI infrastructure expanding rapidly recently, we expect revenue from external customers to be added to the stable demand from existing affiliates.”

He also assessed that the company’s plan to secure large-scale AI infrastructure may be on the conservative side. SAMSUNG SDS CO., LTD. has set a goal to secure approximately 800 megawatts (MW) of AI infrastructure by 2031.

Analyst Kim emphasized, “I believe the goal of securing 800 MW of AI infrastructure by 2031 is close to a conservative investment plan,” adding, “I see a high likelihood that expansion plans will be revised upward as customer demand becomes clearer in the future.”

The diversification of infrastructure investment methods was also viewed positively. SAMSUNG SDS CO., LTD. is pursuing a dual approach, combining direct investment to secure infrastructure with Design-Build-Operate (DBO) projects. The company explained that this allows it to secure a long-term revenue base for services through direct investment while expanding its business by relatively reducing the capital burden via DBO.

Analyst Kim stated, “We believe that the combination of direct-investment infrastructure and capital-efficient DBO projects is highly likely to lead to medium- to long-term revenue and profit growth.”

Annual performance is expected to show a greater improvement next year compared to this year. HANWHA INVESTMENT & SECURITIES estimated that SAMSUNG SDS CO., LTD.’s revenue for this year will be 14.548 trillion won, a 4.4% increase year-over-year, while operating profit will be 827 billion won, a 13.6% decrease. For next year, the firm forecasts revenue to rise 5.3% to 15.319 trillion won and operating profit to increase 29.6% to 1.072 trillion won.

In particular, cloud revenue next year is expected to rise 21.0% from this year’s projected 3.1 trillion won to 3.752 trillion won. Operating profit in the IT services segment is also projected to increase by 31.8%, from 716 billion won this year to 944 billion won next year. Analysts believe that the high growth of the cloud business will drive improved profitability across the entire IT services segment.

From a valuation perspective, the report also identified room for further upside. Compared to the closing price of 207,000 won on the 7th, the stock has 44.9% upside potential to reach the target price of 300,000 won. The estimated price-to-earnings ratio (PER) for next year is 16.9x, which is lower than this year’s projected 22.3x.

Analyst Kim stated, “Second-half earnings are expected to slightly exceed market expectations as GPUaaS utilization rates rise, and starting next year, the pace of growth is projected to accelerate further with the launch of new data centers,” expressing a positive outlook on the company’s medium- to long-term growth potential.