"SKT to Reach 140,000 Won"... GnCenergy Leads the Race for AI Data Center Orders [Stocktopia]

[Financial News] Here is a roundup of reports from major securities firms as of the morning of September 9.
SKT is expanding its data center business by establishing dedicated subsidiary SK Hyper and splitting off SK Broadband. Analysts view this as positive for shareholders because the structure allows the company to return profits through dividends without excessive investment. 
HD Hyundai’s target price was raised as most of its subsidiaries, led by shipbuilding and refining, posted solid results, increasing the value of its subsidiaries. GnCenergy, a supplier of emergency generators for data centers, was newly covered by IBK Securities and was selected as the stock most likely to be the first to numerically demonstrate the benefits of major companies’ AI data center investments.
◆ SKT (017670)— Hana Securities / Analyst Kim Hong-sik
- Target price: 140,000 won (maintained) | Previous closing price: 92,400 won
- Investment rating: Buy (maintained)
Hana Securities maintained its Buy rating, target price of 140,000 won, and status as its top pick in the telecommunications services sector for SKT, saying that expansion of its data center business will become a mid- to long-term growth driver.
After establishing dedicated data center subsidiary SK Hyper, SKT plans to create a new data center company, SK Horizon, by spinning off its wired-services subsidiary SK Broadband. SK Horizon will operate a total of 318 megawatts (MW) in locations including Ulsan and Guro. SK Hyper aims to expand its domestic and overseas operations from 1.5 gigawatts (GW) to as much as 5 GW through a special-purpose company (SPC) structure that raises funds from external investors and invests by project after assessing profitability.
Analyst Kim Hong-sik said, "Assuming traffic grows by 45% annually, SKT’s total data center capacity will reach 1.5 GW by 2032." He added, "Under an optimistic scenario, SKT could achieve data center revenue of 5 trillion won and operating profit of 1 trillion won in 2032." 
Addressing concerns that the 5 GW target could create a heavy capital expenditure burden because it is aggressive, he said, "SK Horizon will expand around data centers that have already been designated, while SK Hyper will have no choice but to verify profitability before investing under its SPC structure." He added, "Given that this approach can reduce the investment burden while increasing dividends for shareholders, data center expansion could enhance SKT’s investment appeal." ※ Spin-offA company is divided into two or more entities, with existing shareholders receiving shares in the new companies in the same proportions. Because the shareholder structure remains unchanged even after the company is split, this method is commonly used when a business is to be developed separately or valued independently.※ Special-Purpose Company (SPC)A company established solely for a specific business or investment. Because funds are raised and invested through a separate legal entity rather than on the parent company’s books, the parent can pursue a project without committing a large amount of its own money. If the project succeeds, it receives profits through fees or dividends.
◆ HD Hyundai (267250)— Heungkuk Securities / Analyst Park Jong-ryeol
- Target price: 330,000 won (raised 10.0%; previous target: 300,000 won) | Previous closing price: 246,500 won
- Investment rating: Buy (maintained)
Heungkuk Securities maintained its Buy rating on HD Hyundai and raised its target price to 330,000 won, forecasting strong third-quarter results on the back of broad-based strength across its subsidiaries.
Analyst Park Jong-ryeol said, "We raised the target price to reflect the continued solid performance across the subsidiaries, including shipbuilding, refining and chemicals, power equipment, construction machinery, and marine services, as well as the increase in subsidiary values."
Third-quarter operating profit is expected to reach 3.2 trillion won, up 88.6% from a year earlier. HD Korea Shipbuilding & Offshore Engineering, which has a larger share of high-price, high-margin projects, and HD Hyundai Oilbank, where refining margins improved amid strong oil prices, are expected to lead profit growth. Most of the remaining subsidiaries, including power equipment maker HD Hyundai Electric, construction machinery company HD Hyundai Site Solution, and marine services provider HD Hyundai Marine Solution, are also expected to post solid results.
Park explained, "The target-price increase reflects the rise in the equity value of these subsidiaries."
He continued, "Despite the recent rebound in the share price, the discount to NAV stands at 58.0%." He emphasized, "This is the time to pursue shareholder returns more actively, including treasury-share cancellations."
He also noted, "This is the time to pursue expanded shareholder returns more actively, including treasury-share cancellations."※ Net Asset Value (NAV) DiscountNAV is calculated by adding the value of a holding company’s stakes in its subsidiaries and the value of its own operations, then subtracting debt. The discount is the extent to which the company’s actual market capitalization trades below that value. For a holding company such as HD Hyundai, NAV rises when the share prices of its subsidiaries increase. A wide discount is therefore viewed as evidence that the company is undervalued.
◆ GnCenergy (119850)— IBK Securities / Analyst Jo Eun-ae
- Target price: 70,000 won (new) | Previous closing price: 44,800 won
- Investment rating: Buy (new)
IBK Securities initiated coverage of GnCenergy and assigned it a Buy rating with a target price of 70,000 won.
GnCenergy manufactures emergency generators that supply electricity to data centers during power outages and holds approximately 70% of the domestic emergency-generator market for data centers.
Analyst Jo Eun-ae said, "The AI data center projects being pursued by GS Group, NAVER, and SK, with completion targeted for 2029, total 8.4 GW. Converted into the size of the emergency-generator market, this amounts to 4.2 trillion won." She analyzed, "Applying the company’s approximately 70% share of the data center emergency-generator market results in 2.9 trillion won. This means orders equivalent to about 10 times its expected 2026 emergency-generator revenue could flow into its order backlog over the coming years."
She added, "Because emergency generators are ordered before data center construction begins, new orders are expected to come in faster than for other equipment."
She concluded, "The 8.4 GW of projects scheduled through 2029 alone will create an annual order market worth more than 1 trillion won. This is the time to raise expectations for earnings-related positives, including new orders, capacity expansion, and improved profitability."※ Emergency GeneratorA generator that produces electricity independently and supplies it to a building during a power outage. Ordinary buildings need generators covering only about 20% of total power for fire-safety equipment. Data centers, however, face service interruptions when power is lost, so they install dozens of generators in parallel with capacity equivalent to 110–150% of the power used by servers and cooling systems. As a result, each new data center generates a large order.

[email protected] Reporter Seong Min-seo Reporter