|A man looks at NHN Corp.’s Naver homepage. (Bloomberg)|
Analysts predicted Naver’s shares would soon outstrip American Internet company Google thanks to its Line messenger service’s continued growth and the possibility of its subsidiary Line Corporation going public this year.
“Naver’s prices are expected to soar this year, and in tandem, its advertising revenues will triple to 200 billion won ($185 million) with the source coming mainly from Japan,” said Kong Young-kyu, an analyst of Shinhan Investment Corp.
Naver’s stock price rose 7.84 percent to 743,000 won at 2:25 p.m. following its earnings report, and closed at 739,000 won.
Analysts predicted its stock would further increase to over 1 million won per share when Line goes public, likely outstripping Google whose shares stand at around $1,100. Though the company has not confirm the IPO plan yet, analysts expected it would file for it this year.
In terms of company valuation, Naver is already higher than Google. “While Naver’s price-earnings ratio is 40-to-1, its American counterpart Google is around 20-to-3,” Seoul-based KB Investment & Securities Co. analyst Choi Hun said.
On Thursday, the company said it posted 641 billion won in revenue in the fourth quarter, up by 27.7 percent on-year. Its operating profit reached 154 billion won, down by 2.1 percent.
However, the figures were higher than analysts’ estimates of 607 billion won in sales and 137 billion won in operating profit.
The stellar fourth-quarter performance was mainly driven by the strong performance of Line, which saw a 232.2 percent jump to 136.9 billion won in sales thanks to the rise in the number of global subscribers. It posted 2.3 trillion won in revenue for 2013 and its operating profit reached 524 billion won.
“Most of Naver’s earnings came from its global business last year. We will keep focusing on the overseas market this year,” said Kim Sang-hun, Naver CEO, in a conference call on Thursday.
Line’s global subscriber base has reached 340 million. “The number of subscribers is rising by 600,000 on daily average across various countries including Turkey, Italy, Europe, Mexico and South America, apart from Asian countries. We will also endeavor to attract North American subscribers this year,” Kim said.
This year, Line is expected to turn a profit, according to chief financial officer Hwang In-joon. “If we spend a similar amount on marketing costs as we did last year, a turnaround will be possible,” he added.
Currently, Japan has the most subscribers, with 50 million, followed by Thailand, Taiwan, India, Indonesia and Spain with more than 10 million users each.
By Shin Ji-hye (firstname.lastname@example.org)