"Naver expected to resolve valuation discount if it merges with Dunamu" - Korea

Korea Investment & Securities on the 10th judged regarding Naver (NAVER) that "if it incorporates Dunamu, which operates the cryptocurrency exchange Upbit, as an affiliate, the valuation (stock price level relative to earnings) discount will be resolved." It maintained a 'Buy' investment rating and a target price of 300,000 won.

Jeong Ho-yun, a researcher at the securities firm, analyzed, "Naver has received a low valuation because its new businesses and other future growth drivers have been relatively weak," and "however, if it enters new cryptocurrency-based businesses by acquiring Dunamu, such undervaluation will be resolved."

It was recently reported that Naver plans to incorporate Dunamu as an affiliate. Naver's financial subsidiary Naver Financial would incorporate Dunamu as a subsidiary through a comprehensive share exchange.

Researcher Jeong evaluated that "Naver could secure various business opportunities in the cryptocurrency market where institutionalization is beginning, such as stablecoins and tokenized securities," and "there is ample room for business area expansion."

Naver's results for this third quarter are expected to meet the market consensus (the average of securities firms' estimates). Korea Investment & Securities estimated Naver's third-quarter revenue and operating profit at 3.02 trillion won and 560.2 billion won, respectively, an increase of 11.3% and 6.6% year-on-year.

Ko Jeong-sam, Hankyung.com reporter jsk@hankyung.com