LS ELECTRIC Co., Ltd. sees resilient demand despite AI data center concerns... Kakao Games Corp.’s target price raised 67% on expectations of a return to profit next year [Stocktopia]

[Financial News] Here is a roundup of reports from major securities firms on the morning of October 22.
Analysts say demand for LS ELECTRIC Co., Ltd. remains strong, with a series of large-scale contracts confirmed despite concerns about the AI data center market, and expect further growth after capacity expansions at home and abroad.
Samsung Biologics posted third-quarter earnings above market expectations despite the effects of a weaker exchange rate and a strike, and was praised for having a favorable environment for securing new orders after the union postponed its second strike. Kakao Games Corp. is expected to return to profitability next year on expanded releases of new games and an improved cost structure; its rating was raised from Neutral to Buy, and it was named the top pick in the gaming sector.
◆ LS ELECTRIC Co., Ltd. (010120)― Hana Securities / Researcher Yoo Jae-seon
- Target price: 270,000 won (maintained) | Previous day's closing price: 166,100 won
- Rating: Buy (maintained)
Hana Securities maintained its target price of 270,000 won and Buy rating for LS ELECTRIC Co., Ltd., saying the company posted earnings above market expectations in the third quarter and continues to see strong orders.
Third-quarter operating profit rose 131.7% year over year to 233.5 billion won, while new orders increased 132.9% to 1.6 trillion won. Data centers accounted for more than half of the new orders. The power infrastructure division, where sales of switchgear and ultra-high-voltage transformers rose sharply, drove growth in revenue. Analysts said that, given the current order backlog, revenue could remain at around this quarter’s level going forward.
Addressing concerns about the AI data center market, researcher Yoo Jae-seon said, “Contrary to the concerns being highlighted, demand remains strong, as shown by the three large-scale contracts disclosed so far in October.”
He added, “The company is expected to focus on expanding production capacity to maintain short delivery times, and further revenue growth is expected after capacity expansions at home and abroad.” The analysis is that, supported by strong market demand, it is now time to focus on expanding production capacity.※ SwitchgearSwitchgear is electrical equipment that distributes incoming power to where it is needed and cuts off the supply if a fault occurs. It is classified by voltage as medium-voltage (MV) or low-voltage (LV) equipment and is considered a key component of data centers.
◆ Samsung Biologics (207940)― Kiwoom Securities / Researcher Heo Hye-min
- Target price: 2 million won (maintained) | Previous day's closing price: 1.417 million won
- Rating: Buy (maintained)
Kiwoom Securities maintained its target price of 2 million won and Buy rating for Samsung Biologics, saying the company posted third-quarter earnings above market expectations despite a weaker exchange rate and the effects of a strike, and that its chances of securing new orders had increased.
Third-quarter revenue rose 19% year over year to 1.4903 trillion won, while operating profit increased 1% to 640.1 billion won, exceeding market consensus estimates for both revenue (1.3569 trillion won) and operating profit (611.4 billion won). Researcher Heo Hye-min said growth continued despite a decline in the average exchange rate and production disruptions caused by the strike in May, thanks to full operation of Plants 1 through 4, the ramp-up at Plant 5 (higher capacity utilization), and revenue recognition from the U.S. Rockville plant.
On the union’s second strike being postponed after a court issued an injunction expanding the scope of prohibited industrial action, Heo said, “This ruling is more favorable to the company and should ease customers’ concerns about production disruptions, while also having a positive effect on securing new orders.”
He added, “The likelihood of signing large-scale order contracts has increased, and we expect to hear that construction of Plant 6 will begin around the end of this year to early next year as orders expand.” The analysis is that, with the strike-related uncertainty easing, the company has entered a period in which large-scale orders are expected alongside solid earnings.
He forecast continued solid growth next year, supported by an expanded ramp-up at Plant 5 and earnings contributions from the Rockville plant and PolyPeptide.※ Rockville plantThis is the biopharmaceutical manufacturing facility in Rockville, Maryland, U.S., whose acquisition from global pharmaceutical company GSK was completed by Samsung Biologics this year. It is the company’s first overseas production base, and its revenue began to be reflected in earnings from the third quarter.※ PolyPeptide GroupPolyPeptide Group is a Switzerland-based contract development and manufacturing organization (CDMO) specializing in peptide medicines. Samsung Biologics signed an agreement to acquire it last July for approximately 2.7 trillion won. The deal will expand the company’s business into peptides, which are used as ingredients in obesity treatments; if the acquisition is completed at year-end, its results will be reflected in earnings starting next year.
◆ Kakao Games Corp. (293490)― Mirae Asset Securities / Researcher Lim Hee-seok
- Target price: 15,000 won (raised 66.7%, from 9,000 won) | Previous day's closing price: 10,140 won
- Rating: Buy (raised from Neutral)
Mirae Asset Securities raised its rating on Kakao Games Corp. from Neutral to Buy and its target price to 15,000 won, saying the company is expected to return to profitability next year. It also named the company its top pick in the gaming sector.
Researcher Lim Hee-seok forecast a return to profit, from an operating loss of 100 billion won this year to operating profit of 145 billion won next year. “Dokkaebi’s World,” released on the 8th, has shown early success; “ArcheAge Chronicles” is due later this year, and four new games are scheduled for release next year, including the anticipated “Odin Q” in the first quarter.
He also forecast that personnel expenses as a share of revenue would fall from 43% this year to around 23% next year, as the company streamlines non-core businesses and improves organizational efficiency.
Researcher Lim also said he expects “the operating leverage effect to take hold in earnest from 2027 as revenue from new games grows and fixed costs decline.” He also noted that “concerns about the chronic delays in releasing new games are easing, which is also positive.” The analysis is that, with new releases increasing and costs being cut at the same time, earnings will begin to rebound next year after a long wait. 

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