[Click eStock] "NAVER, Jeonbang Industry Growth Slowdown... Target Price Down 10.6%"

KB Securities Report

[Asia Economy Reporter Minji Lee] KB Securities maintained a buy rating on NAVER on the 22nd, lowering the target price by 10.6% to 420,000 KRW. This decision was based on the assessment that growth in key upstream industries such as advertising and e-commerce is slowing down.

First-quarter earnings showed sales of 1.85 trillion KRW and operating profit of 301.8 billion KRW, representing increases of 23.1% and 4.5% respectively compared to the same period last year. However, sales and operating profit fell short of market expectations by 1.7% and 11.7%, respectively.

By segment, despite the slowdown in upstream industries, core businesses such as display advertising (20.5%), commerce (28.3%), and content (65.9%) drove external growth. Although development and operating expenses decreased by 19.8%, operating profit margin declined by 1.9 percentage points from the previous quarter to 16.4% due to increases in partner costs (36.3%) and marketing expenses (30%).

This year’s performance is estimated to reach sales of 8.36 trillion KRW and operating profit of 1.55 trillion KRW, growing 22.6% and 16.9% respectively compared to the same period last year. Dongryun Lee, a researcher at KB Securities, stated, “Domestic core cash cow industries such as advertising and e-commerce will continue to expand through new monetization models and market share gains,” adding, “Vertical services like brand stores and live commerce are showing steep growth, and growth centered on merchant solutions is expected.”

Along with expanding the global business base of webtoons, entry into overseas e-commerce markets such as Japan is also expected to be a key task. Webtoons are seeing growth not only in their global user base but also improvements in transaction volume and margin structure, with cross-border content significantly increasing. Furthermore, the revenue base is expected to expand through participation in video content investment via fund formation.

Researcher Dongryun Lee analyzed, “Although cost efficiency is progressing, aggressive upfront investment in human resources including M&A and marketing related to new businesses this year will cause profitability improvement to proceed more slowly than previously expected.”

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