By Kim Yoo-chul
Line, the popular messaging app launched in the aftermath of Japan's earthquake and tsunami, has delayed its plan for its initial public offering (IPO) until the second half of this year, according to market analysts and officials, Monday.
"The plan by Naver to have an IPO for Line will be delayed until the second half of this year due to market uncertainty and the mediocre business growth of Line," said Ahn Ji-maan, an analyst at NH Securities in a note to clients.
The analyst says the local brokerage had expected the stocks of the messaging application to be traded within the second quarter of this year.
"The IPO plan will have a short-term negative impact on the stock price of Naver. But Line's key businesses are on the right track in terms of growth," said Ahn.
Since the announcement of Naver's fourth quarter earnings, Naver saw its stock price decrease by about 19 percent on the main bourse in what officials say is over worries about Line's sustainable growth. By last year, Line generated 1.22 trillion won in sales overseas. Line is owned by Naver.
"Some investors were worried over the slow revenue growth of Line's advertising business. But we expect that business to improve from the second quarter of this year and the momentum will continue throughout 2016," Ahn added.
Naver has still been maintaining the "cautious mode" for its IPO plan. "There have been no decisions made in regard to the IPO at this point. Therefore, we have no further comments," it said.
Since 2014, Naver was said it will make the IPO of Line.
However, chances are high for Naver to go ahead with the IPO plan as Korea's dominant Web portal recently named Hwang In-joon chief financial officer (CFO) at Line.
Hwang, a former executive at Woori Investment in Seoul, joined Naver in 2008 and since then, he has been handling all key financial strategies for Naver.
"Naver is experienced and knowledgeable about market worries such as massive cash outflow from Naver stocks if the Line IPO plan materializes, Naver will announce details about Line's IPO only after all pending issues will be addressed," said the CFO.
The Line IPO is regarded as necessary for Naver's further international expansion. Line wants to grow its overseas business. Although it is the top messaging app in Japan, Taiwan and Thailand, it has struggled to gain much traction in other developed countries such as those in Europe and North America.
"You see that while waiting to list the IPO until the app has realized some of its growth targets makes sense, Line may find itself a player because the proceeds from an IPO may actually help it reach some of its expansion goals more quickly," said an official at a local investment firm.
"The number of Line's messaging app users exceeded over 610 million last year. There will be more time before filing out more paperwork ahead of the IPO; however, this year will be good timing for Naver to bring out Line's IPO," said the manager.
Line previously applied to trade some of its shares in Tokyo and was attempting to trade its shares separately in New York; however, Line pulled back its IPO plans due to disagreements with Naver over the details of the listing.
The Line messaging app lets customers make free calls, send instant messages and post photos or short videos. It is "Facebook in Asia."
Big companies in Asia such as Samsung agreed with Naver to use Line as one of its communication tools for employees to share data and files among themselves.
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LINE CFO Hwang In-joon |
"The plan by Naver to have an IPO for Line will be delayed until the second half of this year due to market uncertainty and the mediocre business growth of Line," said Ahn Ji-maan, an analyst at NH Securities in a note to clients.
The analyst says the local brokerage had expected the stocks of the messaging application to be traded within the second quarter of this year.
"The IPO plan will have a short-term negative impact on the stock price of Naver. But Line's key businesses are on the right track in terms of growth," said Ahn.
Since the announcement of Naver's fourth quarter earnings, Naver saw its stock price decrease by about 19 percent on the main bourse in what officials say is over worries about Line's sustainable growth. By last year, Line generated 1.22 trillion won in sales overseas. Line is owned by Naver.
"Some investors were worried over the slow revenue growth of Line's advertising business. But we expect that business to improve from the second quarter of this year and the momentum will continue throughout 2016," Ahn added.
Naver has still been maintaining the "cautious mode" for its IPO plan. "There have been no decisions made in regard to the IPO at this point. Therefore, we have no further comments," it said.
Since 2014, Naver was said it will make the IPO of Line.
However, chances are high for Naver to go ahead with the IPO plan as Korea's dominant Web portal recently named Hwang In-joon chief financial officer (CFO) at Line.
Hwang, a former executive at Woori Investment in Seoul, joined Naver in 2008 and since then, he has been handling all key financial strategies for Naver.
"Naver is experienced and knowledgeable about market worries such as massive cash outflow from Naver stocks if the Line IPO plan materializes, Naver will announce details about Line's IPO only after all pending issues will be addressed," said the CFO.
The Line IPO is regarded as necessary for Naver's further international expansion. Line wants to grow its overseas business. Although it is the top messaging app in Japan, Taiwan and Thailand, it has struggled to gain much traction in other developed countries such as those in Europe and North America.
"You see that while waiting to list the IPO until the app has realized some of its growth targets makes sense, Line may find itself a player because the proceeds from an IPO may actually help it reach some of its expansion goals more quickly," said an official at a local investment firm.
"The number of Line's messaging app users exceeded over 610 million last year. There will be more time before filing out more paperwork ahead of the IPO; however, this year will be good timing for Naver to bring out Line's IPO," said the manager.
Line previously applied to trade some of its shares in Tokyo and was attempting to trade its shares separately in New York; however, Line pulled back its IPO plans due to disagreements with Naver over the details of the listing.
The Line messaging app lets customers make free calls, send instant messages and post photos or short videos. It is "Facebook in Asia."
Big companies in Asia such as Samsung agreed with Naver to use Line as one of its communication tools for employees to share data and files among themselves.
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