[Click eStock] "NAVER's Corporate Value to Increase with Z Holdings Growth"

Korea Investment & Securities Report

[Asia Economy Reporter Minji Lee] Korea Investment & Securities maintained a buy rating and a target price of 430,000 KRW for NAVER on the 3rd. This is based on the judgment that the increase in earnings following the integration of Z Holdings and the resulting stock price rise will positively impact NAVER's corporate value.

On the 1st, Z Holdings announced the completion of the business integration of ‘Line,’ a NAVER subsidiary, expressing its intention to become a leading internet business operator in Japan encompassing search platforms and messengers. NAVER, which holds a 72% stake in Line, will, through the business integration, own a 65.3% stake in the new Z Holdings via A Holdings, which is jointly owned 50-50 with SoftBank. Z Holdings plans to invest more than 5 trillion KRW over the next five years to secure 5,000 AI engineers worldwide and aims to achieve sales of 21.2 trillion KRW and operating profit of 2.4 trillion KRW by 2023.

Following the business integration, Z Holdings’ core strategy for its advertising division is to expand beyond internet advertising into the offline sales promotion market and enhance advertising efficiency through the use of data and AI. Offline promotion advertising in Japan accounts for more than 30% of the total advertising market, making it a huge market. Ho-yoon Jung, a researcher at Korea Investment & Securities, said, “Based on the high accessibility of Line, Japan’s leading messenger, we plan to actively enter this market,” adding, “We will develop personalized and optimized advertising businesses by more actively utilizing data generated across various platforms.”

In the commerce market, the plan is to build a market ecosystem that covers not only e-commerce but also the offline commerce market by leveraging the characteristics of the messenger. NAVER intends to expand its e-commerce business by introducing Smart Store and attracting various third-party sellers. Researcher Jung explained, “As of 2019, e-commerce accounted for about 13.3% of total retail sales in Japan, which is still in the growth stage compared to South Korea’s 28.6% share in the same year.”

In the fintech sector, it is expected to expand into loan asset management and insurance fields, similar to China and South Korea. The integration of PayPay and Line Pay services scheduled for April next year is seen as increasing the possibility of securing a leading position in the Japanese fintech market. Researcher Jung emphasized, “Japan has been a country where digitalization progressed very slowly, but rapid digitalization is occurring due to COVID-19,” adding, “Z Holdings has very high growth potential.”

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