[Click e-Stock] "Naver, Target Price Lowered to 240,000 Won... Reflecting Concerns over Line Yahoo"

Yuanta Securities on the 12th lowered the target price for Naver (NAVER) to 240,000 KRW, reflecting concerns related to Line Yahoo and a decline in subsidiary value. The investment rating was maintained as Buy.

It is expected to exceed market expectations based on operating profit, with 2024 operating revenue of 2.6105 trillion KRW, operating profit of 472.7 billion KRW, and controlling net profit of 338.4 billion KRW.

Search advertising is projected at 731.4 billion KRW due to expanded introduction of Place ad bidding and advanced targeting, DA at 235 billion KRW driven by increased home feed traffic and advertising, commerce at 719 billion KRW from increased transaction volume in guaranteed delivery services, fintech at 368.5 billion KRW from increased external and offline payments, content at 420 billion KRW despite the record-high monthly paid users in Japan due to yen weakness, cloud at 124.6 billion KRW from increased paid cloud services equipped with HyperCLOVA X, and an operating profit margin of 18.1% is expected due to increased high-margin advertising commerce sales and continued cost efficiency.

It was analyzed that platform traffic (dwell time) centered on the previously weak 10-30 age group is rapidly increasing on Home Feed, Clip, and other services. This traffic has high advertising efficiency, and advertising revenue growth in the high single digits is expected to continue in the second half of the year. Commerce is also expected to maintain double-digit growth along with fintech sales, driven by personalized shopping using search-based AI technology despite the increase in C-commerce. The content business division is expected to recover growth with more aggressive IP acquisition and marketing following the Nasdaq listing of Webtoon Entertainment.

Researcher Changyoung Lee of Yuanta Securities said, "Naver's operating profit in the first half of 2024 increased by 30% compared to the same period last year, but it has been experiencing a continuous decline in multiples due to concerns about weakened AI competitiveness," adding, "The expected 2024 PER of 16 times fully reflects these concerns, including Line Yahoo." He further stated, "Naver's AI is invisibly reflected in increased efficiency of advertising, commerce, and content sales," and "Although the target price has been lowered to 240,000 KRW reflecting concerns related to Line Yahoo and the decline in subsidiary value, the investment rating Buy is maintained."