Buoyed by upbeat earnings, IT solution specialist set to make Kospi debut next month
South Korean IT solutions provider LG CNS said Thursday it will use the initial public offering opportunity as a stepping stone to strengthen its digital transformation (DX) technology capabilities, aiming to become a first mover in the global DX market.
“The upcoming IPO will mark a new turning point for taking a step forward on the global stage. We hope that a successful listing will provide positive momentum for the domestic stock market as well,” said CEO Hyun Shin-gyoon during a press briefing in Seoul.
“LG CNS will continue to pursue constant innovation and challenge itself to grow as a leading company in global digital transformation.”
Artificial intelligence and cloud services have become key growth drivers in the company’s business portfolio. In 2023, these segments accounted for 51.6 percent of total revenue. Currently, about 40 percent of all employees are AI and cloud specialists.
Building on these strengths, LG CNS is actively expanding its global presence. The company is introducing solutions such as Singlex, a platform that provides global solutions for key business areas in a software-as-a-service format, to the international market. Additionally, it is accelerating global expansion in areas such as smart cities, smart factories and smart logistics.
In September, LG CNS established a 50-50 joint venture for DX business with Indonesia's Sinar Mas Group, and formed a partnership with SAP, the global leader in enterprise resource planning solutions, to strengthen its next-generation ERP business.
The company plans to issue 19.38 million shares in the IPO, while aiming for a listing on the country’s main bourse Kospi next month. The target offering price is between 53,700 won and 61,900 won ($36.80-$42.40) a share, with an estimated market capitalization of up to 6 trillion won.
The company plans to use the funds from the IPO to strengthen its key capabilities and invest in future growth within research and development in DX areas such as AI and cloud.
Accordingly, the company is set to accelerate its AI application strategy this year to implement the technology across the entire organization. Centered around its AI center, LG CNS plans to integrate AI across various sectors, including marketing, sales, manufacturing and procurement, aiming to lead customers' AI strategies through innovative technologies such as AI agents.
"Of the public offering funds, 330 billion won will be allocated for acquiring DX-specialized companies. After assessing various candidate companies, we plan to sequentially invest between 2025 and 2027 in AI and software-specialized firms as well as the expansion of smart engineering businesses," said Chief Financial Officer Lee Hyun-gyu.
The company reported cumulative sales of 3.96 trillion won and operating profit of 312.8 billion won for the first three quarters last year. The figures went up by 7 percent on-year and 17.5 percent, respectively.
The company is highly likely to set a new record in annual sales for the sixth consecutive year. In 2023, revenue reached 5.61 trillion won, a 13 percent increase from a year ago, while operating profit grew by 20 percent on-year to 464 billion won.
Recently, it also received an upgraded credit rating outlook from the nation’s top three rating agencies. Korea Ratings, Korea Investors Service and Nice Investors Service upgraded LG CNS’ rating outlook from AA- stable to AA- positive last month. This is the first time since 2009 that the company’s credit rating outlook has been upgraded.
LG CNS is conducting a book building process for institutional investors from Thursday to Jan. 15 and general subscriptions for public offering shares will open for only two days: Jan. 21-22. The lead underwriters for the IPO are KB Securities, Bank of America and Morgan Stanley.
