[Click eStock] Naver, Growth Slows with With-Corona... Target Price Down

[Asia Economy Reporter Kwon Jae-hee] Kiwoom Securities maintained a 'Buy' rating on Naver (NAVER) on the 18th but lowered the target price from 430,000 KRW to 400,000 KRW. This is due to the expectation of slowed growth following the high growth in the commerce division during the COVID-19 pandemic and the transition to the with-COVID era.

Naver's revenue for the first quarter of this year is expected to decrease by 2% compared to the previous quarter, reaching 1.888 trillion KRW. Search platform revenue is projected to decline by 5% quarter-on-quarter due to seasonal off-peak effects. The core commerce business is expected to show little change compared to the previous quarter. However, on the cost side, the effect of a 10% increase in employee salary budgets compared to the previous year and continued marketing increases centered on content businesses such as webtoons are expected to reduce the operating profit margin by 1.5 percentage points from the previous quarter to 16.7%.

Analysis suggests that Naver's potential for corporate value upside depends on the active promotion and investment in core businesses such as secondary video production and the metaverse.

Researcher Kim Jin-gu of Kiwoom Securities stated, "Although it may take some time under the changed management, if active investment execution continues, Naver will be able to compete with major global companies."

Naver, which benefited from COVID-19, is expected to see some slowdown in growth due to the with-COVID transition. Accordingly, Kiwoom Securities has lowered the appropriate value of Naver's e-commerce business from 17 trillion KRW to 13 trillion KRW.

Researcher Kim said, "Operating profit this year was lowered by 8.6% from the previous forecast considering the slowdown in commerce sales growth and increased labor costs," adding, "The target price was also lowered from 430,000 KRW to 400,000 KRW reflecting the adjustment of the appropriate value of the commerce business."

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