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Brokerage cuts target share price of Naver

Local securities firm Daishin Securities slashed South Korea’s top portal operator Naver’s target share price by 11 percent in a report released Monday.

The securities firm revised the portal’s target price down to 670,000 won ($620) from the 750,000 won set three months ago on the grounds that Naver’s dominant power is expected to decline in the mobile environment.

Daishin said Naver‘s flagship messaging app Line is likely to see its growth potential weaken in games and advertising.

“Naver used to be in a dominant position as the gateway in the computer environment. However, it is now facing competition in the mobile environment as (users) can directly access diverse applications such as messenger apps, shopping malls, news and games,” said Kim Yoon-jin, an analyst of Daishin Securities, in the report.

“Growth potential of Line’s main businesses including games and advertising is expected to turn weaker. The firm is seeking to expand its business into payment, music and taxi services on the messenger platform, but it would take some time to deliver meaningful sales figures,” he added.

Naver’s sales in the first quarter stood at 740 billion won, an increase of 18 percent on-year. Its operating profit was 192 billion won, up by 3 percent from the previous year. The gains still fell short of the securities firm’s estimate of 771 billion won in sales and 217 billion won in operating profit.

Daishin forecast Naver would see its total sales grow 14 percent on-year to 3.1 trillion won and operating profit rise 17 percent to 855 billion won this year.

By Shin Ji-hye (shinjh@heraldcorp.com)
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