[Click eStock] DS: "Crypto Legislation Delays... NAVER Target Price Lowered"

DS Investment & Securities has lowered its target price for NAVER. This adjustment comes as the company’s operating profit margin is expected to decline this year, and, in addition, the much-anticipated crypto division is facing delays in both crypto asset-related legislation and the planned merger.

Choi Seungho, a research analyst at DS Investment & Securities, stated in a report on NAVER released on April 14, "From a conservative perspective, we are removing the previously assigned value for the crypto business. Accordingly, we are lowering the target price to 300,000 won, while maintaining our buy recommendation." As of the previous day, NAVER’s closing price was 199,000 won.

Choi first projected that NAVER would post sales of 3.2169 trillion won and operating profit of 549.6 billion won in the first quarter, slightly below market consensus. He explained, "As the company’s business stance shifts from defensive to aggressive, marketing expenses related to advertising and commerce, as well as depreciation costs, are expected to rise significantly." He added, "With increased investment in commerce-related areas such as World Cup broadcasting rights, both marketing and depreciation costs are likely to continue climbing on an annual basis."

Accordingly, NAVER’s operating profit margin for this year is estimated at 17.6%, down from 18.3% in the previous year. While he positively assessed investments in commerce, he also pointed out, "Investments into GPUs now need to start delivering results."

Choi commented, "The core value drivers for NAVER’s future business lie in commerce and crypto." He added, "Commerce is set to establish itself as NAVER’s new growth engine, driven by the consolidation of Wallapop, double-digit growth at Poshmark, and increased marketing." Annual commerce sales are estimated to be around 2.7 trillion won. However, he also noted, "The crypto business is facing merger delays, which will likely postpone any positive impact on the share price."

He further stated, "Previously, we reflected NAVER’s target price using a sum-of-the-parts (SOTP) valuation: 15 trillion won for the crypto business and 45 trillion won for the main business." He observed, "The delay in digital asset legislation is also affecting the NAVER Financial-Dunamu merger." He continued, "Given the importance of the legislation, it cannot be ruled out that the scheduled merger date (September) may be pushed back further," and presented a new target price with the crypto value removed.

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