Growth of Big Data Industry Expected This Year

The authors are analysts of Shinhan Investment Corp. They can be reached at  jongseon@shinhan.com and sh.kim@shinhan.com, respectively. -- Ed.


1Q20 results likely decent at sales of KRW107.1bn and OP of KRW14.8bn

We now expect NICE Information Service to post decent results for 1Q20 at sales of KRW107.1bn (+6.2% YoY) and operating profit of KRW14.8bn (+7.3% YoY). Demand for credit bureau (CB) services jumped with individuals and businesses increasingly seeking loans amid credit crunch concerns triggered by the COVID-19 pandemic. Continuing demand for mid-range interest rate loans also helped to drive solid earnings in 1Q20.

However, the corporate intelligence business could report sluggish earnings for 2Q20 as the continuing spread of COVID-19 threatens to weigh on peak season demand for corporate credit information used to evaluate potential partners or companies bidding for projects. We will need to keep an eye on the issue in 2Q20.

Waiting to see if subsidiary NICE ZiniData remains in the black through 2020

NICE Information Service's big data subsidiary NICE ZiniData swung to net profit in 2019 amid the rise in market expectations for revision of the nation's three data laws. The turnaround in earnings provided confirmation of progress made by the company and helped to brighten the outlook for growth. In order to forecast further top-line growth and margin gains, we will need to check up on the subsidiary’s strategic direction on key issues such as work force management going forward.

Retain BUY and raise target price to KRW19,000

NICE Information Service, with its focus on CB services, faces limited earnings concerns from the COVID-19 pandemic. We revise up our target price to KRW19,000 based on 2020F EPS of KRW714 and a target PER of 26.5x, reflecting the recent upturn in share prices of global peers. Expectations for growth of the big data industry should take shape this year on the passage of the three data laws and enforcement decree. We retain our BUY rating given: 1) forecasts for solid growth in earnings from CB services for individuals; 2) growth in market demand for mid-range interest rate loans; and 3) rising expectations for wider data use following revision of regulations.

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