[Click eStock] "NHN Transforming into a Tech Company, Strong 3Q Earnings Expected"

3Q Operating Profit Expected at 30.8 Billion Won... Forecast to Exceed Consensus by 17.6%
Growth Across Commerce, Payment, Cloud, etc.
"Tech Company Entry Imminent... Potential Highlighting of Non-Gaming Business"

[Asia Economy Reporter Minwoo Lee] NHN is expected to achieve strong earnings in the third quarter of this year, surpassing market consensus. Although profits are still driven by the gaming sector, analysis indicates that the company's core is clearly shifting towards technology fields such as e-commerce and cloud services.

On the 15th, Shinhan Financial Investment estimated that NHN would record consolidated sales of 482.2 billion KRW and an operating profit of 30.8 billion KRW in the third quarter of this year. These figures represent increases of 15.0% and 12.4%, respectively, compared to the same period last year. The operating profit is expected to exceed the market consensus of 26.2 billion KRW by approximately 17.6%. Even after reflecting the sale of PNP Secure, which had a quarterly operating profit of about 3 billion KRW, growth is expected compared to the previous quarter and the same period last year.

Senior Researcher Moonjong Lee of Shinhan Financial Investment explained, "In the second quarter of this year, performance was weak due to the off-season for web board games and the absence of updates for Japanese mobile games, but in the third quarter, the peak season effect of web board games during the Chuseok holiday and some inflow of users from competing web board games likely contributed. Additionally, updates to Japanese mobile games had a positive impact, resulting in total game sales increasing by 12.6% quarter-on-quarter to 97.9 billion KRW."

Shinhan Financial Investment highlighted NHN's transformation into a technology company. Although profit volatility is still determined by the gaming sector, the core axis is shifting towards technology. The researcher stated, "Sales from overseas commerce businesses, such as China cross-border e-commerce and North American B2B commerce, are steadily increasing, establishing a foothold in areas that do not compete with large domestic platform companies. The transaction volume of the simple payment service 'Payco,' which had been sluggish due to a decline in offline transaction volume, is also reversing to growth, and domestic and international cloud sales are rapidly increasing."

Against this backdrop, Shinhan Financial Investment maintained its 'Buy' rating and a target price of 100,000 KRW for NHN. The closing price the previous day was 70,700 KRW. The researcher predicted, "NHN is at the beginning of its transformation into a technology company as non-gaming sectors such as commerce, payment & advertising, and technology experience high growth. Businesses that had been overshadowed by big tech companies may now come into the spotlight."