[Click e-Stock] "NHN, Lack of Stock Price Momentum... Investment Opinion and Target Price Downgraded"

"Poor Performance in Q4 Last Year"

On the 18th, NH Investment & Securities downgraded its investment opinion on NHN to 'Neutral (HOLD)', stating that "although NHN is developing various growth businesses, it lacks earnings or momentum to drive up the stock price," and lowered the target price from 29,000 KRW to 23,500 KRW. The closing price on the previous day was 20,700 KRW.

On the same day, researchers Jaemin Ahn and Dohee Kim from NH Investment & Securities noted, "NHN's Q4 revenue last year is expected to be 607.6 billion KRW, an 8.4% increase compared to the same period in 2022. Operating profit is expected to increase by 2.8% to 10.3 billion KRW, but this falls short of the previous estimate of 25.8 billion KRW and the market consensus of 22.1 billion KRW," adding, "The strong sales from web board games and the performance of Japan's 'Youkai Watch Puni Puni' in Q3 last year were not significantly reflected in Q4. The commerce business is also expected to see limited sales growth despite the Chinese Singles' Day season."

They further explained, "The cloud business also seems to have missed out on the seasonal peak effect in Q4 due to delays in government contracts. Marketing expenses are expected to decrease by 23.8% year-on-year to 21.4 billion KRW, but various one-time expenses related to year-end closing may arise, making profitability challenges inevitable."

The problem lies in the slow recovery. Researcher Ahn said, "Despite stable sales from web board games, other games have not shown significant results. The commerce business, which was expected to recover last year, will likely need more time," adding, "'Darkest Days (root shooter)', 'Project G (RPG)' based on a famous Japanese intellectual property (IP), and 'Uparu Odyssey (SNG)', which is set for a global launch, are anticipated titles. There are also new releases like 'Pebble City (social casino)', 'Project D (action)', and 'Hidden Witch (puzzle)', but their performance remains to be seen."

Researcher Ahn also stated, "The underperformance in cloud, commerce, and webtoon businesses last year needs to be confirmed for recovery this year," and predicted, "The Payco business will inevitably see a decrease in transaction volume as its partnership with Samsung Pay ends this year, but this is expected to be positive for profitability."

NHN was spun off from Naver's gaming division in August 2013 and listed on the KOSPI market in the same month. Its 2022 revenue was 2.1149 trillion KRW, with business segment revenue proportions of approximately 21% from games, 42% from payments and advertising, 8% from content, 15% from commerce, and 14% from technology. While the company’s traditional business focused on games, it has recently been actively diversifying into IT-based businesses such as commerce, fintech, and content.

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