[Click eStock] "NHN to Hit Bottom in Q2, Showing Improvement in Second Half"

Cape Investment & Securities Report

[Asia Economy Reporter Minji Lee] Cape Investment & Securities maintained a buy rating on NHN on the 27th and set a target price of 100,000 KRW. Although the second-quarter earnings are expected to fall short of expectations, a gradual improvement is anticipated in the second half of the year.

NHN's second-quarter revenue is expected to reach 462.2 billion KRW, representing a 14% increase compared to the same period last year. Operating profit is forecasted to decrease by 12% to 23.2 billion KRW.

Jinseong Choi, a researcher at Cape Investment & Securities, said, "Second-quarter earnings will fall short of consensus," adding, "The absence of new releases in the gaming sector, combined with the off-season effect of web board games, is expected to cause gaming business revenue to underperform expectations." In the first quarter, the mobile gaming business rebounded due to various promotions, but this effect appears to have disappeared in the second quarter.

However, the second half of the year is expected to show improvement from the second-quarter bottom. This is because a casual game utilizing the famous Japanese IP Dragon Quest is scheduled for release. It is anticipated that expectations will be reflected ahead of the launch, as it uses one of the most well-known IPs among recent new releases.

The performance increase in the non-gaming business sector is also encouraging. Recently, the non-gaming business sector has generally shown favorable trends, with notable growth in the commerce and technology business divisions. In the commerce sector, NHN Godo and Accommate continue to achieve steady growth in commerce within China, while the cloud business sector is expected to secure public sector orders and see a full-scale expansion of global sales through NHN Tecorus. Researcher Jinseong Choi stated, "The non-gaming business sector is continuously growing, and it is also reasonable to raise expectations for the gaming business with the year-end release of new titles utilizing famous IPs."