Naver Accelerates Revenue Growth, Hits 'Jackpot' in Q4 with Commerce

Year-End Peak Season 4Q Record Performance Forecast
Growth Rate UP: This Year Over Last Year, Next Year Over This Year...

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[Asia Economy Reporter Minwoo Lee] An analysis suggests that NAVER's sales growth rate is accelerating. It is expected that this year’s peak season at the end of the year will bring an unprecedented commerce peak season, resulting in surprising performance.

On the 6th, Mirae Asset Daewoo predicted that this year is the first year in which commerce becomes the most important variable for NAVER’s growth, and this peak season is expected to experience an unprecedented boom. The fourth quarter is the biggest peak season, with year-end and Christmas overlapping, concentrating 30-35% of the annual e-commerce transaction volume. Previously, the domestic e-commerce market has grown significantly since August, and growth was confirmed again in October, so even greater growth is expected.

In fact, NAVER’s payment amount and market share have steadily increased. In the third quarter of this year alone, the payment amount reached 7.056 trillion KRW, accounting for 16.8% market share. Compared to the same period last year, the total e-commerce payment amount (GMV) increased by 42%, and the Smart Store transaction amount (GMV) rose by 72%. Commerce sales also recorded 285 billion KRW, increasing by 41% during the same period.

Researcher Changkwon Kim of Mirae Asset Daewoo explained, "The business units driving NAVER’s external growth this year are commerce and fintech, where NAVER Pay sales are recognized, with their sales ratio expected to rise from 27% in 2019 to 34% in 2020." He added, "While the fintech sector, which is infrastructure-oriented, contributes little to profitability, attention should be paid to the high profitability contribution of commerce sales, which consist of sales commissions and advertising fees."

Next year’s performance is expected to grow even more steeply. This year, due to the impact of COVID-19, search advertising focused on small business owners, which accounts for the largest portion of performance, slowed down. However, recently, the advertising market is recovering. The strong performance of new targeted advertising products such as 'Smart Channel' and the base effect are expected to allow operating profit growth rates to exceed this year’s. Additionally, the annual 1 trillion KRW scale net profit of Z Holdings will be newly added through the equity method, which is expected to ease valuation burdens.

According to financial information provider FnGuide, NAVER’s consolidated performance forecast (consensus) for next year is sales of 6.6299 trillion KRW and operating profit of 1.4035 trillion KRW, representing increases of 16.9% and 21.4% respectively compared to this year. Researcher Changyoung Lee of Yuanta Securities said, "There is a cyclical automatic growth structure across all business sectors, and performance momentum is expected in Japan and Southeast Asia next year," adding, "It is the most promising stock among platform companies in 2021."

This content was produced with the assistance of AI translation services.