[Click e-Stock] NHN's Cloud Business Reappraised, Target Price Raised

On September 1, Hanwha Investment & Securities maintained its 'Buy' investment rating on NHN, noting that the value of its technology businesses—including cloud services—could be reappraised in the second half of this year, driving a continued uptrend in the share price. The company also raised its target price from KRW 65,000 to KRW 87,000.

Sohye Kim, analyst at Hanwha Investment & Securities, commented, "Although the recent share price rise has been somewhat steep, it represents a process in which the previously undervalued cloud business is being re-evaluated and the discount is narrowing." She added, "If profitability is confirmed through quarterly results in the second half of the year, the basis for independently evaluating the technology business division should become even clearer."

Kim explained, "NHN currently operates 38 megawatts (MW) of infrastructure, mainly in Pangyo, Gwangju, and Yangpyeong. In the second half of next year, the company plans to secure an additional 30MW—20MW through external leasing and 10MW via in-house construction."

She continued, "The existing graphics processing unit (GPU) infrastructure in Yangpyeong has achieved initial utilization rates thanks to substantial volumes from the government’s AI computing support program. In contrast, the new 30MW capacity will see its demand expand not only from additional government requirements but also from GPUaaS (GPU as a Service) for general corporate clients and from commercial demand focused on overseas customers."

She added, "The contribution of the additional 30MW to performance is expected to become significant from 2028 rather than 2027. While existing government demand will underpin the downside of the business, if GPUaaS demand from global enterprises—including those in Japan—and domestic corporations fills the new capacity, it is highly likely that both revenue growth and profitability improvement will materialize beyond 2028."

Kim calculated NHN’s fair enterprise value at KRW 2.852 trillion, reflecting a game business value of KRW 1.2 trillion, a payment business value of KRW 300 billion, and a technology business value of KRW 1.3 trillion. She noted that the target price of KRW 87,000 implies an upside of about 24.1% compared to the current share price.

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