[Click e-Stock] "Naver Expected to See Earnings Level Up in Second Half"

Buy Rating and Target Price Maintained

On May 20, Korea Investment & Securities evaluated Naver by stating, "From the second half of the year, profit levels are expected to rise thanks to the performance of the commerce division, and valuation pressure is also low." Accordingly, the company maintained its 'Buy' investment rating and a target price of 260,000 won.

Jung Hoyoon and Hwang Injun, analysts at Korea Investment & Securities, explained, "Starting in June, Naver is in the process of raising the commission rate on Smart Store and Brand Store transaction volumes by 1 percentage point, and based on an annual transaction volume of 30 trillion won, this will generate an additional 300 billion won in revenue." They also projected, "From the third quarter, when the effect of the commerce commission increase is reflected, Naver's operating profit will reach the upper end of the 500 billion won range."

They continued, "Advertising growth remains solid, and commerce revenue, which was relatively sluggish in the first quarter, is also expected to grow in the second half of the year." They emphasized, "At this point, with expectations of improved performance in the second half, it is worth considering a buying opportunity for Naver."

Regarding Naver's first-quarter results, they highlighted that "double-digit growth was maintained." Revenue reached 2.78 trillion won, up 10.3% year-on-year, and operating profit was 505.3 billion won, up 15.0%, meeting market expectations. Revenue from the search platform division increased 11.9% to 1.01 trillion won, and revenue from the commerce division rose 12.0% to 787.9 billion won. In particular, shopping ad revenue grew by 16.4%, driving overall growth. However, commission revenue increased by only 8.6%, showing a relatively slower pace.