NHN, Stock Price and Performance 'Soaring' in the Untact Era

Stock Price Rises 63% in Two Months... Q1 Operating Profit Increases 30% Year-on-Year

[Asia Economy Reporter Kum Boryeong] NHN, recognized as a leading company in the untact (contactless) sector, is showing strong performance in both earnings and stock price.

According to the Korea Exchange on the 23rd, NHN's closing price on the previous day was 89,500 KRW. Considering it was 55,000 KRW on March 19, it has risen by 62.73% in just two months.

NHN posted better-than-expected results in the first quarter thanks to strong sales in its payment business, advertising, and gaming. NHN's consolidated revenue for the first quarter of this year was 394.6 billion KRW, and operating profit was 28.3 billion KRW. These figures represent increases of 6.5% and 30.2%, respectively, compared to the previous year. Net profit also rose significantly by 58.9% year-on-year to 17.6 billion KRW.

Through this earnings announcement, NHN confirmed that its Payco payment business and PC/mobile board games greatly benefited from the COVID-19 pandemic. Among the non-gaming sectors, Payco (payment), NHN Comico (webtoons), and NHN Godo are representative online untact platform businesses.

Seong Jonghwa, a researcher at Ebest Investment & Securities, analyzed, "All these businesses are continuing their own high growth, and the acceleration of the untact era triggered by COVID-19 has created an even more favorable business environment. In the gaming sector, the nature of the business is fundamentally an online untact business. While other genres are generally neutral to COVID-19's impact, the PC/mobile board game genre clearly shows benefits from COVID-19."

The momentum from the relaxation of board game regulations is also an important point. Separate from the untact momentum, the relaxation of board game regulations (abolition of daily loss limits), which took effect on the 7th of last month, is another positive factor to anticipate. In particular, the second quarter is expected to see a significant increase in board game sales due to this regulatory easing.

Ebest Investment & Securities raised NHN's target stock price from the previous 105,000 KRW to 120,000 KRW. Regarding this, researcher Seong explained, "The acceleration of the untact era triggered by COVID-19 is a multiple premium factor when evaluating Payco's value. Also, the profit value of the gaming sector is greatly contributed by Payco's value, and with the expected effects of board game regulation easing, there are sufficient reasons to raise the valuation. The board game regulation easing momentum is expected to operate in the gaming sector during the second and third quarters, and the Payco MyData momentum is expected to operate in the non-gaming sector during the third and fourth quarters."