[Click eStock] "NAVER, Growth Driven by Advertising and Commerce"

Long-term Platform Expansion Expected
Yuanta Securities Maintains NAVER Target Price at 550,000 Won

[Asia Economy Reporter Gong Byung-sun] NAVER posted second-quarter earnings that exceeded market consensus, driven by growth in advertising and shopping (commerce) sectors. In the second half of the year, the expansion of paid services and platform growth in the webtoon sector is expected to contribute to further growth.

According to Yuanta Securities on the 23rd, NAVER's second-quarter revenue rose 30.4% year-on-year to 1.6635 trillion KRW, and operating profit increased 8.9% to 335.6 billion KRW. These figures surpassed the consensus estimates of 1.6109 trillion KRW and 327.1 billion KRW by 3.3% and 2.6%, respectively.

The growth in advertising and commerce sectors led to results exceeding consensus. The search advertising segment's second-quarter revenue increased 14.3% year-on-year to 603.2 billion KRW. Display advertising (DA) revenue for the second quarter reached 222.8 billion KRW, up 48.0% compared to the same period last year. Commerce revenue also grew 42.6% during the same period. Lee Chang-young, a researcher at Yuanta Securities, explained, "Strengthened delivery capabilities and a surge in sales from brand stores and shopping live broadcasts helped the commerce sector maintain high growth."

Advertising and commerce sectors are expected to continue driving growth in the second half of the year. The researcher said, "The search and DA segments will grow due to increased search traffic, economic recovery, and expansion of performance-based advertising spaces," adding, "The commerce sector is expected to sustain high growth driven by an increase in same-day delivery share and fresh product delivery in partnership with Emart."

The monetization and platform expansion of the webtoon sector are also expected to support growth in the second half. The webtoon sector, which recorded a net loss of 102.3 billion KRW last year and was identified as the main cause of increased costs, plans to expand paid services. Additionally, profitability of 'Wattpad,' the world's largest web novel platform recently acquired, is expected to improve. Platform expansion is another factor to watch in the second half. New features such as game development capabilities will be launched, and animation and broadcasting content will be added to the platform. In the long term, the platform is planned to expand into education and metaverse businesses.

Accordingly, Yuanta Securities maintained its 'Buy' rating on NAVER with a target price of 550,000 KRW. The closing price on the previous day was 440,000 KRW.

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