[Click eStock] "NHN, Transitioning into a Tech Company"

Clear Profitability Improvement in Non-Gaming Sector
Shinhan Financial Investment Raises NHN Target Price from 100,000 Won to 110,000 Won

[Asia Economy Reporter Gong Byung-sun] NHN posted third-quarter earnings this year that exceeded market consensus, driven by improved profitability in its non-gaming sector. New game releases and blockchain game development are also expected to serve as growth engines going forward.

According to Shinhan Financial Investment on the 10th, NHN's third-quarter revenue this year increased by 14.8% year-on-year to 472.5 billion KRW, and operating profit rose by 18.6% during the same period to 27.9 billion KRW. These figures surpassed the respective consensus estimates by 0.48% and 8.02%.

Profitability in the non-gaming sector improved significantly. Over the past year, cloud subscription orders exceeded 100 billion KRW, and in Japan, NHN was designated as an Amazon Web Services (AWS) Premier Consulting Partner. Revenue from global commerce businesses, including China’s cross-border e-commerce and North American B2B commerce, is also steadily increasing.

Researcher Lee Moon-jong of Shinhan Financial Investment said, “NHN is strengthening its position in areas that do not compete with major domestic platform companies,” and forecasted, “The non-gaming revenue share, which was only in the 60% range in 2018, is expected to exceed 80% next year.”

The payment and advertising sectors achieved record quarterly revenue. Payment and advertising revenue in the third quarter rose 23.4% year-on-year to 208.4 billion KRW. As domestic and overseas merchants expanded, Payco’s transaction volume increased to 1.9 trillion KRW. Offline payment amounts also grew 56% year-on-year, partly due to Campus Zone and other factors.

Accordingly, Shinhan Financial Investment maintained its “Buy” rating on NHN and raised the target price from 100,000 KRW to 110,000 KRW. The researcher explained, “Profitability improvement is expected due to the strong performance of the non-gaming sector,” adding, “With a solid schedule of new releases such as ‘Dragon Quest Cash Cash’ through the first half of next year, multiple blockchain-based games are also planned to be developed in collaboration with Wemade.”

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