[Click eStock] "NHN, Top Small and Mid-Cap Pick... Only Firm Able to Respond Instantly to Demand"

Hanwha Investment & Securities Raises Target Price to 65,000 Won

On August 11, Hanwha Investment & Securities raised its target price for NHN from 50,000 won to 65,000 won, while maintaining its "Buy" investment rating and its status as a top pick among small and mid-cap stocks.

So Hye Kim, a researcher at Hanwha Investment & Securities, stated, "We are raising our earnings estimates once again while increasing our target price for NHN," adding, "Even based solely on the solid value of its web board business, the current valuation appears to be undervalued. We also maintain our existing view that NHN’s competitive edge among domestic companies engaging in GPUaaS will result in multiple re-rating."

NHN reported second-quarter results with revenue of 757.9 billion won and operating profit of 57.9 billion won, beating market expectations by 35%. Kim pointed out, "Growth in all segments—games, payments, and technology revenue—outpaced our estimates, and this translated into significant profit leverage," and analyzed, "Technology business revenue grew 27.1% quarter-on-quarter as GPUaaS performance was realized, with revenue and profit from the Yangpyeong region’s GPU operations, which began at the end of March, being reflected to a much greater extent than expected."

The primary driver of this strong profit growth was identified as the profitability of the GPU cloud business. Kim noted, "Profit margins exceed the market’s standard assumption of 15-20%, indicating that our company’s proactive infrastructure investments are starting to produce results in line with surging demand."

Furthermore, Kim added, "With more than 30MW of additional capacity expansion planned through next year, and a government-backed ‘Bilirubin’ project worth around 4 trillion won set to be rolled out, there is significant potential to raise earnings estimates after 2027."

NHN was also seen as differentiated from other major companies through its ability to provide 'instant power.' Kim explained, "While global customers are engaged in long-term contract discussions, unlike large ICT firms investing for demand expected three to five years out, NHN is effectively the only player that can immediately respond to current demand, which is a key competitive advantage."

This content was produced with the assistance of AI translation services.