[Click eStock] "NHN's 1Q Performance Steady... Games and New Businesses Are Key Going Forward"

1Q Sales 459.9 Billion KRW, Operating Profit 29.2 Billion KRW
Stable Growth in Games, Commerce, Payment, Cloud, etc.
Large-Scale Investment Still Needed... Focus on Recovery of Game Profitability

[Asia Economy Reporter Minwoo Lee] NHN posted solid results in line with market consensus for the first quarter of this year. Analysts suggest that the key to future performance improvement lies in the recovery of profitability in the gaming sector and growth in new businesses.

On the 14th, SK Securities maintained its 'Buy' rating and target price of 93,000 KRW for NHN based on this background. The closing price the previous day was 70,600 KRW.

NHN recorded consolidated sales of 459.9 billion KRW and operating profit of 29.2 billion KRW in the first quarter of this year. These figures represent increases of 16.6% and 3.1%, respectively, compared to the same period last year. The results are considered to be in line with consensus expectations.

In the gaming sector, PC web board, mobile web board, and other mobile game segments grew by 38%, 19%, and 10%, respectively, compared to the same period last year. Jinman Lee, a researcher at SK Securities, explained, "The web board segment continued its growth due to account linkage between PC and mobile platforms and the seasonal peak. Major Japanese mobile game titles also recorded favorable sales thanks to key promotional events and collaborations."

In the payment and advertising sectors, sales increased by about 19% year-on-year but decreased by approximately 5.1% quarter-on-quarter. Lee noted, "NHN Korea Cyber Payment saw a decline in sales compared to the previous quarter due to the base effect of the peak season in Q4, while Payco's offline payment amount, which is under focused investment, increased by 45% year-on-year. It is important to pay attention to the growth strategy results centered on various new services such as customized coupons, Baedal Teukgeup, Campus Zone, and meal tickets."

Additionally, the commerce sectors including NHN Godo and NHN Global, as well as the technology sectors such as NHN Cloud and NHN Tecorus, showed stable growth trends.

Lee forecasted, "NHN is attempting to transform into a data-centric IT company by leading payment services, e-commerce, and cloud businesses. It is positive that the major new businesses are steadily growing in scale, but continuous large-scale investment is still necessary. It is essential to verify profitability relative to investment and mid-to-long-term competitiveness, and also to pay attention to whether the gaming business recovers profitability through the performance of new titles."