NHN Expects Growth in Fintech and Web Game Business Sectors This Year

[Asia Economy Reporter Minji Lee] NHN appeared sluggish overall last year as the web game sector’s performance declined due to the impact of the novel coronavirus disease (COVID-19), but this year it is expected to deliver solid results with recovery in fintech and gaming businesses.

According to Meritz Securities on the 16th, fourth-quarter sales and operating profit last year are expected to increase by 10.5% and 56.7% respectively compared to the same period last year, reaching 442.2 billion KRW and 27.4 billion KRW. However, the fourth quarter is estimated to slightly miss market expectations of 45.2 billion KRW in sales and 3.23 billion KRW in operating profit.

Web board games saw increased usage in October due to the Chuseok holiday effect and winter season, but the worsening COVID-19 situation led to negative impacts from PC bang (internet cafe) operation restrictions being more heavily reflected. Businesses such as payment, advertising, commerce, and technology benefited from seasonal peak effects. However, NHN Accommate, which operates a China-based e-commerce business, held the Singles’ Day (Guanggunjie) event twice, diluting its impact, and PNP Secure showed limited sales growth due to the absence of face-to-face sales amid COVID-19. The operating profit margin was recorded at 6.2%, similar to the previous quarter.

Labor costs increased due to severance payments following the dismissal of executives amid poor gaming business performance, and marketing expenses rose due to Japanese TV advertisements related to ‘AMS’. Net profit turned to a loss due to intangible asset impairment losses related to Bugs and Travel Doctor.

This year, NHN’s stock price is expected to be determined by the performance of the gaming division and fintech. Ho-yoon Jung, a researcher at Korea Investment & Securities, said, “Success in mobile game hits is necessary for a full-scale performance improvement,” adding, “It is important to watch the success of four new titles, including Idol Masters, scheduled for release in the first half of the year.”

Fintech business performance is also important. At the end of last year, NHN launched the Payco investment service, which allows investments in funds and bonds through Payco. Although competition in the fintech industry is fierce, centered around Kakao and Naver, Payco’s investment service, which has over 4 million monthly active users (MAU), is expected to contribute to this year’s performance.

There is also anticipation for the MyData business. NHN is expected to build a revenue model following the acquisition of the MyData main license. On the 27th, the Financial Services Commission plans to issue the main license related to MyData, and Payco is expected to obtain it smoothly. Receiving the license does not immediately allow the addition of business models. Daye Kang, a researcher at Meritz Securities, said, “By establishing the technical process to link APIs with financial institutions, revenue models such as advertising, fees, and user reporting subscriptions related to MyData can be implemented from the third quarter.”

Researcher Kang added, “Payco’s transaction volume showed a roughly 20% increase year-on-year, reflecting negative impacts from COVID-19, but it underperformed compared to competitors,” explaining, “This year, with the end of COVID-19, growth is expected in Payco Order and Campus Zone based on high offline penetration rates.”

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