"Naver secures long-term growth engine through big deal with Dunamu" - Daishin

Daishin Securities report

Daishin Securities noted on the 29th that Naver, through a 'big deal' with Dunamu, has secured long-term growth drivers rather than short-term earnings improvement.

Ji-eun Lee, a researcher at the securities firm, said, "It has been mentioned that Song Chi-hyung, chairman of Dunamu, could become the largest shareholder of Naver Financial and, in the longer term, possibly of Naver," and added, "Dunamu's current unlisted corporate value is about 12 trillion won, and Naver Financial is valued by the market at about 3–5 trillion won."

He also said, "As of last year, operating profit was about 1.19 trillion won for Dunamu and about 103.5 billion won for Naver Financial, so after the share exchange it is highly likely that Song Chi-hyung will become the largest shareholder of Naver Financial," and "For Chairman Song Chi-hyung, the meaning of this deal is secured only if such a structure actually forms."

The researcher expressed the view that the scenario in which Song Chi-hyung becomes the largest shareholder after this transaction is more realistic. Therefore, the analysis is that for Naver it is meaningful as securing long-term business growth drivers rather than short-term earnings improvement.

He explained, "It appears that the two companies intend to kick off the establishment of a domestic won-denominated stablecoin ecosystem through this deal," and "They intend to issue a stablecoin and link it to Naver Pay to secure real-world payment use cases for the stablecoin."

He continued, "In the long term, they can secure the domestic won stablecoin market, and use deposits obtained using stablecoins as collateral to generate investment returns and provide loan services backed by stablecoins," and "Naver Financial can maximize profits by reducing payment fees or introducing new financial services."

Summarizing securities industry opinions, Naver's core business growth momentum is currently weakened. This is because a slowdown in search advertising revenue growth was confirmed in the second-quarter results.

The researcher said, "In a phase of slowing core business growth, business cooperation with Dunamu is more meaningful for securing long-term growth drivers and leadership than simply short-term earnings improvement."

Min-kyung Shin, Hankyung.com reporter radio@hankyung.com