[Click eStock] "Naver, Profit Growth Continues... Business Viability Needs Verification"

SK Securities maintained a buy rating and a target price of 240,000 KRW for Naver (NAVER) on the 11th, stating that "growth potential is confirmed as profits have increased for six consecutive quarters."

On the same day, Nam Hyoji, a researcher at SK Securities, said, "Naver's operating revenue for the third quarter of this year is expected to increase by 8.7% year-on-year to 2.66 trillion KRW, and operating profit is expected to rise by 31.3% to 499.1 billion KRW (in line with market consensus)."

In the e-commerce business, the take rate is rising due to consumer shopping data analysis and exposure of recommended products. Webtoons introduced the 'Alseora Ddak!' service, which recommends works tailored to user preferences, for the first time in Korea and plans to apply it globally soon.

Researcher Nam explained, "Applying artificial intelligence (AI) across services improves user experience and will lead to business revenue in the mid to long term. In advertising, personalized content delivery and advanced targeting increase conversion rates, positively impacting both search and video ads."

The current stock price is evaluated to have downside protection due to expanded shareholder returns. Researcher Nam said, "In addition to the shareholder return strategy announced last year (cash dividends of 15-30% of average free cash flow over two years, and 1% annual treasury stock cancellation for three years), Naver announced at the end of last month the acquisition (October 2 to December 28) and cancellation (December 31) of treasury stock worth 401.2 billion KRW." He added, "We also confirmed efforts to maintain profitability through cost control."

He added, "To reverse the current stock price trend, it is necessary to resume growth of core businesses following recovery in the upstream market and identify services that will drive revenue growth."