[Click eStock] "Naver, Undervalued Appeal Highlighted"

Strong Performance Expected in Q3 This Year
Korea Investment & Securities Maintains Naver Target Price at 540,000 Won

[Asia Economy Reporter Gong Byung-sun] Naver (NAVER) is expected to report earnings in line with market consensus for the third quarter of this year. Despite regulatory issues, its core business model is unlikely to be harmed.

On the 8th, Korea Investment & Securities estimated Naver's Q3 revenue to be 1.749 trillion KRW, up 28.6% year-on-year, and operating profit to be 345.1 billion KRW, up 18.3% during the same period. These figures slightly exceed the consensus estimates of 1.664 trillion KRW and 338.3 billion KRW, respectively.

All business segments are expected to show strong performance. Revenue from the search platform is projected to increase by 18.4% year-on-year to 841.1 billion KRW, and commerce segment revenue is also expected to rise 32.5% to 378.1 billion KRW during the same period. With the growth of Naver Webtoon, content segment revenue is forecasted to increase 48.6% year-on-year to 170.9 billion KRW. Additionally, operating expenses are expected to rise 5.7% quarter-on-quarter to 1.404 trillion KRW. While operating expenses had been increasing by 10% quarter-on-quarter until Q2 this year, the growth rate is now slowing down.

Although the current stock price has stalled, Korea Investment & Securities explains that it remains undervalued. Researcher Ando Young from Korea Investment & Securities said, “Investment sentiment recovery is difficult as regulatory controversies continue for the time being,” but added, “The direction of the discussed regulations aims to address platform companies’ unfair practices and excessive fees, and Naver’s core business models such as advertising and commerce will not be damaged.”

Furthermore, the webtoon business is also evolving. Over the past 2-3 years, the most important genres in the domestic webtoon market have been fantasy genres such as isekai or reincarnation stories. While Naver had been slower than Kakao in securing these popular genres, it has recently been actively expanding its webtoon lineup in these genres. The results of this lineup strengthening are beginning to appear.

Researcher Ando emphasized, “Even applying conservative assumptions, Naver has entered an undervalued range,” and added, “The current moment is a good time and price range to buy Naver stock.”

Korea Investment & Securities maintained its investment opinion of ‘Buy’ on Naver with a target price of 540,000 KRW. The closing price on the previous day was 373,000 KRW.

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