[Alpha Biz= Paul Lee] Hyundai Motor Securities announced on July 4 that it expects Naver to report second-quarter revenue of KRW 2.91 trillion, up 11.6% year-on-year, with operating profit reaching KRW 532.3 billion, a 12.6% increase from the same period last year—figures that align with market expectations. The brokerage maintained its "Buy" recommendation and raised its target price from KRW 280,000 to KRW 300,000.



Analyst Hyun-yong Kim noted that the company is benefiting significantly from strong performance in both search and commerce businesses. “Search platform revenue is expected to grow 7% year-on-year, with commerce seeing a 15% rise, emerging as the main driver,” he said. He added that the rapid expansion of feed-based display advertising is accelerating traffic and monetization in both the search and commerce sectors.



Commerce transaction volume is projected to grow 8% year-on-year, driven by factors such as the launch of a standalone shopping app, increased commission rates, and the rapid growth of the ‘N Delivery’ service, enabling Naver to outpace the market by 6 percentage points. However, the operating margin is expected to see only slight improvement, reaching 18.3%, due to higher employee stock compensation costs following a sharp rise in share price.



Kim also highlighted progress in the company's AI-based ‘briefing’ search service. Since its launch in late March, the AI-generated search results have increased from 1% to 3–5% of total queries. Naver aims to expand that share to over 15% by year-end. He noted the AI service is being applied beyond general search results, such as summarizing user reviews on Naver Places.



The analyst further emphasized that key growth drivers in Naver’s commerce business include the strengthening of its shopping ecosystem through a dedicated app and membership program, as well as increased fee income from ‘N Delivery’. The standalone app, launched on March 12, exceeded 7 million downloads as of June 8. Membership growth has been gradual, with an uptick anticipated following the June 27 release of Squid Game Season 3.



Additionally, the ‘N Delivery’ service continues to expand its product categories beyond daily essentials and cosmetics. Plans are underway to significantly strengthen its fresh food offerings with the integration of Kurly into the top-tier menu on Naver Shopping by the end of Q3.

 

 

 

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