[Click eStock] "NHN, Investment Opinion 'Neutral' - Target Price Lowered to '30,000 Won'"

Shinhan Investment Corp. on the 28th downgraded NHN's investment opinion to 'Trading Buy (Neutral)' and lowered the target price to 30,000 KRW, citing expected deterioration in commerce and slowdown in cloud growth.

NHN recorded operating revenue of 598.3 billion KRW (up 6.6% year-on-year) and an operating loss of 7.8 billion KRW (turning to a loss), missing the consensus operating profit estimate of 16.8 billion KRW. The loss was caused by bad debt write-offs of long-term uncollected receivables in NHN Commerce's China operations and delays in the public cloud business.

In the gaming sector, Web Board continued to grow despite regulatory easing. It remained solid even though the Chuseok holiday fell in the third quarter last year, and existing mobile casual titles rebounded with content updates. Although regulatory easing for Web Board will continue, the exact timing is unclear in the short term and may be later than usual, but the increasing market share is seen positively. The key will be whether the game business can improve profitability through the release of six new titles this year.

The commerce sector is expanding its regional and product spectrum overall, but is sluggish as the large Chinese market has not rebounded in the short term. In particular, due to increased demand for low-priced products and intensified e-commerce competition, the company is not expected to make large-scale investments. It is analyzed that a gradual cost reduction to improve the business structure rather than external growth is necessary.

The payment and advertising sector continues to maintain stable sales with increasing transaction volume at KCP and ongoing acquisition of major brands. Additionally, Payco is showing a faster-than-expected improvement in losses, and since the proportion of transaction volume contributing to sales is rapidly increasing, the possibility of structural improvement in 2024 appears very high.