Choi Seung-ho, a DS Investment & Securities researcher, said on the 30th that if Naver (NAVER) conducts a virtual asset business through mergers and acquisitions (M&A) with Dunamu, growth and a rerating (reappraisal) would be possible.
Choi presented a "Buy" investment rating on Naver with a target price of 400,000 won. It is 45.7% above the previous day's closing price (274,500 won) and the highest among domestic securities firms.
Choi assessed that the reasons were clear for why Naver had long been in an undervalued range at around 18 times price-to-earnings ratio (PER, market capitalization ÷ net profit). They include a slowdown in search revenue due to the spread of artificial intelligence (AI) search, a market share gap with Coupang that has not narrowed despite growth in commerce, and a lack of profitability related to the AI business.
However, Choi said the story changes if Naver combines with a virtual asset business that is being given high valuation (corporate valuation) in global markets. Currently, Circle is recognized at around 140 times PER, and Coinbase at around 70 times PER.
Choi said, "Among global platform corporations, there are no corporations that simultaneously run a virtual asset business," adding, "Compared with the growth of other competitors, Naver's growth through a virtual asset business would not lag, so we can assign a top-end level of 26 times PER."
The variable is regulation. Choi said, "Along with the 2017 virtual asset regulations, the implicit 'separation of gold and virtual assets' applies," adding, "It means traditional financial companies are prohibited from investing in or collaborating with virtual asset companies, and there are issues such as whether Naver Financial should be viewed as a traditional financial company."
He then said, "Since there is no separate law, there are opinions in the legal community that there will be no problem," while also noting, "It is hard to predict and will act as a potential risk factor for Naver's share price depending on actual regulation."