"An Opportunity to Buy Cloud Stocks Cheaply... NHN's Revenue Expected to Grow Sharply in Q4"

[Financial News] Meritz Securities expects NHN's revenue from national projects to grow sharply beginning in Q4. The brokerage maintained its "Buy" rating and raised its target price from ₩64,000 to ₩80,000.
Lee Hyo-jin, an analyst at Meritz Securities, said on the 21st, "NHN's consolidated revenue for Q3 is expected to reach ₩766.8 billion, while operating profit is projected at ₩53.6 billion, representing year-over-year increases of 22.6% and 93.8%, respectively."
The increase in web-board game payment limits and growth in the cloud business are positive developments. However, unlike Q2, when there were no major events, costs normalized in Q3 due to participation in events such as the Tokyo Game Show (TGS). As a result, profit growth from the previous quarter is expected to take a brief pause.
Still, the cloud business is expected to enter a period of full-fledged growth beginning in Q4. Lee said, "Yangpyeong appears to have already completed contracts for operations for the entire year, so second-half growth will come from existing facilities such as Gwangju and Pangyo." She added, "Given that existing facilities generate a large share of their revenue from national projects, growth in related revenue is expected to accelerate again in Q4."
She continued, "Once the pause in Q3 ends, contracts will begin in earnest next year." She added, "In a supplier-led market, the opportunity to buy a neocloud operator at a 2027E price-to-earnings ratio (P/E) of 11.7x remains attractive."

[email protected] Lim Sang-hyuk Reporter