[Click eStock] "NAVER, Focused on AI Solutions... Expected to Defend C-Commerce"

Meritz Securities evaluated NAVER on the 9th, stating that "the growth axis is shifting toward brand stores, so a relative defense against C-commerce invasion is expected."

They forecasted NAVER's consolidated sales and operating profit for the first quarter to be 2.5 trillion KRW and 413.9 billion KRW, respectively, indicating solid performance. Since the fourth quarter of last year, AI B2B (business-to-business) revenue has begun to be recognized in commerce and cloud sectors.

Due to the sluggishness of the price comparison service, NAVER Shopping's GMV growth rate is limited to 6%, but thanks to the brand package solution and delivery guarantee, brokerage and sales revenue from separate subsidiaries are expected to grow by 28% year-on-year.

Cloud is in the off-season in the first quarter, but considering the launch of the Neuro Cloud service in November last year, a somewhat high estimate similar to the fourth quarter was maintained.

The display segment, which had continued to decline last year, is expected to turn positive in the first quarter, and after the official launch of Chijijik within the second quarter, its contribution to the search platform is expected to increase. Webtoon, which succeeded in turning profitable in the fourth quarter, is expected to maintain similar performance throughout the year until its IPO.

Due to software responses triggered by ChatGPT, domestic institutions rapidly increased their investment weight in NAVER until June 2023. However, after the acquisition of Fashimark, foreign selling pressure continued, and the stock price reaction was lukewarm. The relatively inferior position in AI monetization performance and workforce reduction also diminished its appeal. The institutional demand that had been holding out quickly shifted to other sectors due to issues such as value-up.

Active offensives by Ali and Temu also contributed to worsening investor sentiment. With the invasion of C-commerce, the leadership of fast fashion in the U.S. has shifted, and recently, a decrease in users has been detected even on Amazon, making it difficult to feel secure domestically.

NAVER has already shifted the axis of commerce growth to brand stores centered on AI solutions, so it is expected that performance can be defended compared to concerns. The growth rate of NAVER Shopping brokerage sales (excluding Cream, Amuse, and Fashimark) is projected to be 27% in 2024.

Researchers Hyojin Lee and Hara Kang of Meritz Securities said, "While concerns have increased and the portfolio has been sufficiently cleared, the full-scale monetization of AI has not been reflected," adding, "It is time to focus again on performance improvement."