Naver–Dunamu merger delayed, target price cut – Meritz Securities

The Financial News reported that Meritz Securities said on the 6th that Naver Corporation is expected to post solid sales in the first quarter of this year, but face heavier pressure as infrastructure costs are projected to jump 30%. The brokerage maintained its "Buy" rating but lowered its target price from 410,000 won to 330,000 won.
Meritz Securities forecast Naver Corporation’s consolidated first-quarter revenue and operating profit at 3.1863 trillion won and 549.6 billion won, respectively. These figures represent year-on-year growth of 14.3% and 8.8%, but they fall short of market consensus.
Lee Hyo-jin, an analyst at Meritz Securities, said, "Transaction volume at Naver Smart Store is estimated to have grown 14.6% year-on-year, delivering strong results helped by factors such as the Coupang effect. However, infrastructure expenses are expected to rise due to higher depreciation of computing assets, including graphics processing units (GPU), which were fully introduced starting in the fourth quarter."
Lee added, "The merger with Dunamu Inc., which had been scheduled for completion in March, has been delayed to the second half as the related legislation was pushed back, and the planned closing date for both companies has been postponed from the end of June to September."
She went on to explain, "In light of the weakness in the Global Software business and the fact that the Dunamu merger event has been deferred to the second half, we have lowered our valuation multiple to 20 times," citing this as the reason for the target price cut.
She also emphasized, "Naver Corporation is still expected to benefit from the second-stage legislation on digital assets, but as the bill and the financial authorities’ approval of the merger have both been delayed until after September, the company is effectively in a momentum vacuum."


dschoi@fnnews.com Choi Doo-seon Reporter