NHN Stock Soars on Record Earnings and National Pension Service Purchase—"Already Surpassing Target Price" [Stock of the Week]

Nearly Doubled in Five Trading Days
"NHN Should Be Re-evaluated as an AI Cloud Company"
"Cloud Business Value Will Continue to Grow"

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NHN's stock price soared, boosted by record-breaking earnings and news of the National Pension Service's purchase. As the performance of the Artificial Intelligence (AI) infrastructure business—now a core growth driver—began to be reflected in revenue, securities firms have started to reevaluate NHN as an AI infrastructure company.

NHN is an IT company operating with three pillars: games, payments, and cloud. Its game services are led by web board games such as Go-Stop and Poker through Hangame, Korea’s first online game portal. Subsidiary NHN Payco supports online and offline payments through its simple payment service PAYCO, while NHN Cloud, another subsidiary, provides cloud and AI infrastructure services for both public sector and corporate clients.

Stock Doubled in Only Five Trading Days After Earnings Surprise

According to the financial investment industry on August 19, NHN's share price—which had been stuck in the KRW 30,000 to 40,000 range this year—rose for four consecutive trading days after its earnings surprise on the 11th, up until the 14th. For the second quarter of this year, NHN recorded sales of KRW 757.9 billion and an operating profit of KRW 57.9 billion, marking year-on-year increases of 25.3% and 164.1%, respectively. Both figures exceeded the consensus: sales (KRW 700.8 billion) and operating profit (KRW 42.9 billion), setting historic quarterly highs.

By segment, technology sales stood at KRW 159.8 billion, payments came to KRW 394.0 billion, and games reached KRW 139.6 billion. Growth in technology sales was attributed to NHN Cloud’s expansion as GPU-related AI revenues were realized, as well as the growth of NHN Techorus’s AWS resale business in Japan. Payment sales increased due to securing large, new imported car merchant partners and higher transaction volume at major merchants, supporting the growth of NHN KCP’s revenue. Game sales were driven by web board game revenue growth and a successful update to "#Compass".

Revaluation Thanks to Cloud—Rising Expectations

Notably, starting from the second quarter of this year, NHN Cloud's GPU operations business began to be fully reflected in its revenue, cementing the AI infrastructure business as a core growth engine. Last July, NHN Cloud was selected for a government GPU project worth KRW 1.4 trillion. Leveraging this, the company launched its AI data center in Yangpyeong-dong, Yeongdeungpo-gu, Seoul in March, and from the second quarter this year, began supplying NVIDIA B200-based GPU-as-a-Service (GPUaaS) offerings. GPUaaS allows users to rent only as much GPU hardware as needed via the cloud, instead of making direct hardware purchases and assembly.

The securities industry holds a positive outlook for NHN as an AI cloud company. Among domestic "Neo-cloud" providers specializing in GPU-based cloud computing services for AI training and inference, NHN is the only one to generate substantial actual sales, and so a valuation re-rating is expected. Kim Dongwoo, analyst at Kyobo Securities, said, "The government GPU project conducted at Yangpyeong Data Center is estimated to have driven KRW 25 billion in revenue for the second quarter this year," adding, "Long-term contracts for this project should be sufficient, so sales are expected to reach KRW 75 billion this year and KRW 93.6 billion next year."

Market expectations are even higher. Securities firms have raised their target prices for NHN to the KRW 63,000 to 70,000 range, yet the current share price already exceeds those targets. Specifically, Korea Investment & Securities raised its target from KRW 56,000 to 63,000; Kyobo Securities, from KRW 49,000 to 64,000; Samsung Securities, from KRW 46,000 to 65,000; Bookook Securities, from KRW 47,000 to 66,000; and NH Investment & Securities, from KRW 54,000 to 70,000.

NHN Now Held by the National Pension Service—Future Growth Outlook

The National Pension Service’s buying activity is also impacting NHN’s share price momentum. According to the Financial Supervisory Service’s DART system, the National Pension Service disclosed that it purchased 7,198 NHN shares on August 12. This increased its NHN holdings to 3,272,666 shares and its equity stake to 10.12%.

With its cloud business, NHN is expected to continue improving its performance. By the second half of next year, NHN aims to secure an additional 30 MW of floor space for its data centers (physical space for installing and operating IT equipment such as servers and storage), expanding its GPUaaS operations. Of the planned 30 MW, 20 MW will be obtained through leasing, and 10 MW via in-house data centers. The internal data center is targeted to commence operations in the latter half of next year.

Oh Donghwan, senior analyst at Samsung Securities, commented, "With the price increase in GPUaaS, revenue from GPU operational business is projected to exceed KRW 300 billion over five years," adding, "By additionally securing AI infrastructure by the second half of next year to meet GPUaaS market growth, the business value of NHN Cloud's GPUaaS offerings will increase further, especially as domestic AI data center supply remains tight through 2028 and NHN Cloud maintains a first-mover advantage in both data centers and GPUs."

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