[Click eStock] Naver, Major Share Value Decline "Target Price Lowered from 550,000 to 450,000 Won"

[Asia Economy Reporter Lee Seon-ae] Hana Financial Investment announced on the 14th that it maintains a buy rating on Naver (NAVER) but lowers the target price from 550,000 KRW to 450,000 KRW. This adjustment is due to a downward revision in the valuation of the global peer group and a decline in the value of major shareholdings.

Yoon Ye-ji, a researcher at Hana Financial Investment, stated, "In the mid to long term, there is sufficient momentum to raise the valuation, such as the expansion of Smart Store into Japan, the full-scale launch of the Zepeto service, and the beginning of revenue contributions from the blockchain business, so we maintain the buy rating." She added, "Once the new CEO begins actively communicating the mid to long-term business plans starting with the first quarter earnings conference call, we expect a clearer future outlook."

The first quarter revenue is expected to be 1.85 trillion KRW, with an operating profit of 345 billion KRW. It is anticipated that the revenue growth rate of the search platform and commerce, which notably benefited from COVID-19, will normalize and show a decline compared to the previous quarter. Payments, also linked to the commerce division, are expected to experience a decline, and cloud sales are likely to be concentrated in the second half of the year in line with government agency budget execution, so significant growth in the first half is not expected.

However, the content division is expected to continue high growth close to 70% annually, similar to last year, establishing itself as a significant business segment. The operating profit margin is forecasted to decline by 0.7 percentage points compared to the same period last year. The main reasons are increased labor costs reflecting salary raises and ongoing marketing expenses for webtoons and payments.

Meanwhile, unlike commerce, which experiences growth slowdown due to seasonal off-peak advertising and a low base effect, content sales including webtoons and Snow are expected to continue high growth exceeding 60% this year as well.