Meritz Securities said on Jan. 6 that NHN's core businesses are set to grow this year and losses at subsidiaries could be resolved. It raised its target price to 45,000 won from 27,000 won and upgraded its investment view to buy from neutral. NHN's closing price in the previous session was 31,950 won.
The Ministry of Culture, Sports and Tourism on Dec. 20 gave notice of a draft revision to the Enforcement Decree of the Game Industry Promotion Act to raise the monthly payment limit for web board games. The monthly limit will be raised to 1 million won from the current 700,000 won, and if it proceeds similarly to the past, the new limit is likely to take effect in Jul.
Lee Hyo-jin, an analyst at Meritz Securities, said, "NHN stands to benefit the most, as the company's web board revenue rose 31% when the limit was raised in 2022," and noted, "Most of the increased limit translated into revenue, strengthening the market dominance of the No. 1 web board operator."
The analyst said, "This easing will also bring the greatest effect to the company, and assuming implementation in the second half of this year, web board revenue in 2027 is projected to rise 19% from last year."
Over the past three years, NHN has wound down noncore businesses centered on commerce and content. In the fourth quarter of last year, it ended the travel business and the Korean, English-speaking, and French services of Comico. The analyst said, "Unlike in 2022, in 2026 NHN will maintain its previously tight marketing cost stance, and KCP is expected to cruise this year on the back of Tesla's new model effect."
She added, "The basis for shareholder returns previously used the sum-of-the-parts (SOTP) method valuing separate businesses, but it has been changed to consolidation EBITDA, making it possible to improve subsidiary profits," and said, "It is time to enjoy a cycle in which profits surge sharply for the first time in four years."