[Click eStock] "Naver, Strong Q3 Performance... High Growth Potential"

Yuanta Securities Issues 'Buy' Investment Rating and Sets Target Price at 360,000 KRW... Closing Price on 29th at 298,500 KRW

[Asia Economy Reporter Kum Boryeong] Naver (NAVER) recorded strong performance in the third quarter, and analysis suggests high growth potential going forward.

According to Yuanta Securities on the 30th, Naver's third-quarter operating profit excluding Line was 291.7 billion KRW, and revenue was 1.3608 trillion KRW. Compared to the previous year, operating profit increased by 1.8% and revenue grew by 24.2%.

Researcher Changyoung Lee of Yuanta Securities explained, "There was balanced revenue growth across all sectors. Search advertising, which had contracted by -1.04% in the previous quarter due to COVID-19, recovered with 3.6% growth to 542 billion KRW. Display advertising surged 26.3% year-on-year to 168.1 billion KRW, driven by the strong performance of the mega-traffic based performance advertising 'Plus Channel.' Commerce grew 40.9% to 285.4 billion KRW, sustained by the ongoing untact economy effect. Fintech reached 174 billion KRW (67.6%), content 115 billion KRW (31.8%), and cloud 76.3 billion KRW (66.2%), maintaining high growth."

The fourth quarter is the peak season for advertising. High growth in performance advertising, strengthened shopping competitiveness (delivery) through strategic equity investment with CJ, and resulting high growth in fintech, content, and cloud sectors are expected.

Lee said, "Although the recent imposition of a fine by the Fair Trade Commission for Naver's unfair practices highlighted risks, the fine is not large, and the corrective measures are expected to have limited impact on the company's search and shopping platform revenue-generating capabilities, so it is not considered a material risk. Rather, the increase in shopping-related sales driven by the untact economy expanded after COVID-19, the partnership with Studio Dragon to adapt content from over 600,000 global webtoon creators into video, and the full-scale entry into the Japanese e-commerce market?growing at an annual average rate of 52%?through Line-Yahoo Japan Shopping are all parts of Naver's unlimited future growth potential."

Yuanta Securities gave Naver a 'Buy' rating with a target price of 360,000 KRW. The closing price on the 29th was 298,500 KRW.