Naver shares to jump further on solid earnings

Naver shares, which had hovered below the 120,000 won ($100.25) level for months until July, have surged more than 30 percent over the past three months, according to the Korea Exchange (KRX) Sunday.

Securities analysts said the share price of the nation’s largest internet portal operator still has room to jump further since Naver’s major units are expected to post solid earnings in the fourth quarter. The IT giant also plans to carve its Naver Pay division up to establish a financial subsidiary in November.

According to the KRX, the share price of Naver closed at 114,500 won in the July 1 session. However, it jumped 31.4 percent over the past three months to close at 150,500 won Oct. 4.

Naver was the nation’s 10th-largest firm in terms of market capitalization at the end of last year, but it is now the fifth-largest.

Experts said investors paid attention to the firm’s decision to establish the new financial unit. Naver’s online shopping mall and digital comics service have also posted solid growth for months.

“Naver’s portal, online shopping mall and advertising business have shown steady growth. The firm’s major subsidiaries, including LINE and Naver Financial, are expected to gain momentum in value. These will help boost Naver’s share price,” said NH Investment &Securities researcher Ahn Jae-min.

“Naver’s digital comics service has boasted high traffic not only in Korea but also in Japan via the firm’s portal and LINE platform. It has also recently introduced the comics service in the U.S.. We believe Naver will split off its comics division up for an initial public offering (IPO) by 2021.”

Ahn added the total value of Naver and its units is estimated at 31.2 trillion won. Naver is worth 19.1 trillion won while its mobile messenger platform unit LINE and Naver Financial are worth 6.8 trillion won and 1.7 trillion won, respectively.

NH Investment &Securities raised Naver’s target share price from 165,000 won to 190,000 won.

Mirae Asset Daewoo analyst Kim Chang-kwon agreed.

“We believe Naver’s digital comics division is currently worth 5.7 trillion won,” he said. “The share price of Naver is likely to reach above the 200,000 won level considering the the value of its comics division.”

Naver has recently broadcast its popular digital comics series, such as “Hell is other people” and “Cheolima Mart,” on TV cable channel tvN.

The company is estimated to post 1.62 trillion won sales with a 182.2 billion won operating profit in the third quarter of the year. The sales were up 15.9 percent, but the operating profit declined 17.8 percent from a year ago.