[Click eStock] "Outstanding Sales Growth... Naver Shopping Value Also Increasing"

Growth Across All Sectors Amid Advertising Peak Season and COVID-19 Base Effects
"Attention Needed on Structural Growth of Naver Shopping"

[Asia Economy Reporter Minwoo Lee] Due to the advertising peak season effect and the base effect of COVID-19, NAVER is expected to achieve strong performance in the second quarter of this year. In particular, the value of Naver Shopping is anticipated to become increasingly prominent.

On the 24th, Korea Investment & Securities forecasted that NAVER will record consolidated sales of 1.634 trillion KRW and operating profit of 322 billion KRW in the second quarter of this year. This represents an increase of 28.1% and 4.4%, respectively, compared to the same period last year. Compared to the previous quarter, sales and operating profit are expected to rise by 9.0% and 11.3%, respectively.

Performance across all sectors is expected to improve broadly. Search platform sales, which account for the largest share, are estimated at 816.5 billion KRW, up 20.4% year-on-year and 8.5% quarter-on-quarter, driven by the advertising peak season effect and the COVID-19 base effect. The fintech (finance + technology) sector is also expected to show stable growth. With an increase in Naver Pay transaction volume, it is projected to generate 230.5 billion KRW, a 39.9% increase compared to the same period last year. However, operating expenses are also expected to rise significantly, estimated at 1.313 trillion KRW, a 35.6% increase from the first quarter of last year. This is attributed to increased development and operational costs due to stock compensation expenses.

Korea Investment & Securities emphasized the need to focus on the structural growth of Naver Shopping. In the second quarter, the number of Smart Store sellers continues to increase steadily, rapidly boosting the Gross Merchandise Volume (GMV). Brand Stores are also expanding their presence with over 300 brands entering the platform. To narrow the delivery capability gap with Coupang, NAVER is collaborating with CJ Logistics to establish new fulfillment centers in Gunpo and Yongin, Gyeonggi Province, expanding fast delivery services, which is also a positive factor.

Researcher Hoyoon Jung of Korea Investment & Securities analyzed, "Although competition in the domestic e-commerce market is intensifying, NAVER occupies a unique position as an open platform for all sellers and offers convenient services from payment to delivery," adding, "NAVER's dominance is expected to strengthen gradually."

Against this backdrop, Korea Investment & Securities maintained a 'Buy' investment rating and a target price of 540,000 KRW for NAVER. The closing price on the previous day was 423,500 KRW. Researcher Jung explained, "NAVER's corporate value has generally been undervalued compared to companies like Kakao and Coupang," and added, "As NAVER's profit growth rate recovers, this factor is likely to stand out as an investment attraction."

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