[Click eStock] NAVER, Despite First Quarter Earnings Below Expectations

[Asia Economy Reporter Junho Hwang] Yuanta Securities maintained the target price of Naver (NAVER), which posted earnings below market expectations in the first quarter of this year, at 500,000 KRW.

Researcher Changyoung Lee of Yuanta Securities stated, "Advertising revenue is expected to increase in the second quarter of this year due to the advertising peak season and economic recovery following the lifting of social distancing measures." He anticipated that vertical services such as new brand stores, shopping live, grocery shopping, and gifting, which have higher margin rates (3-5%) compared to the existing Smart Store transaction margin rate (2%), will grow by 78% year-on-year in commerce. External payments are also expected to improve by 65% year-on-year, and fintech and webtoons are expected to grow, potentially leading to overall revenue growth of more than 20% this year.

He explained, "Although Naver is facing a double challenge of slowing growth due to the disappearance of the COVID-19 effect and margin decline due to increased overseas investments and labor costs, its high-profit domestic businesses in search, commerce, and fintech are still experiencing high growth. Profitability improvements are expected in Japanese commerce and fintech, as well as in global webtoons and secondary copyright markets, making it highly likely that the potential value will be realized."

Meanwhile, Naver announced that its operating profit for the first quarter of this year reached 301.8 billion KRW, a 4.5% increase compared to the previous year. However, this fell short of market expectations.

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