"Software Companies: Zero Impact from Tariffs but Valuation Remains an Issue"

Hana Securities analyzed on the 9th that there is no tariff impact on software companies, but recent declines in global big tech may cause valuation pressure.

Junho Lee, a researcher at Hana Securities, explained this in a report titled "Zero Tariff Impact but Valuation Is a Different Issue."

He stated, "There is no direct impact from the US-imposed reciprocal tariffs on software companies including NAVER and Kakao," but added, "The recent decline in global big tech can act as a valuation burden."

Lee evaluated, "In the past, NAVER and Kakao received higher multiples compared to global peers reflecting the uniqueness and scalability of the Korean market. After 2024, Kakao remained high due to its core business restructuring, while NAVER maintained slightly lower multiples compared to US big tech alongside profit growth."

In this context, Lee analyzed that the stock price decline of global big tech could be a burden for software companies. He said, "In this phase, the stock price decline and valuation contraction of global big tech are clearly burdensome. If the trade dispute caused by reciprocal tariffs prolongs, indirect effects cannot be ignored."

He emphasized, "There is a possibility that the discourse will expand to include service products, centered on the European Union (EU), because the current situation where US big tech holds global dominance and generates enormous sales is not reflected in reciprocal tariffs."

He added, "The US is rather demanding deregulation of platforms by country, raising concerns. The impact on domestically focused NAVER and Kakao is expected to be limited, but the resolution of external uncertainties may lead to a rebound in the overall internet industry."