Investors Remain Positive on Tumbling NHN Shares
By Cho Jin-seo
Staff Reporter
South Korea's signature Internet company NHN's share price rebounded on Tuesday while stock analysts say it has fallen too much over the past seven weeks.
The operator of Naver, the largest Web portal site, and Hangame, an online game portal, has seen its stock price fall by 30 percent since Oct. 26, the biggest drop it has had for years. On Tuesday, the price regained 4.5 percent to close at 230,900 won.
After briefly touching 300,000 won and bypassing Hyundai Motor and KT in terms of market capitalization in late October, the stock price began its free fall, reaching 208,500 won Tuesday morning.
The company has seen a steady decrease in the number of its news service visitors since the summer, which has been criticized by Internet users to be plain. But analysts insisted that the waning popularity of its news service will not cause damage to the firm's main profit source ― search-engine advertisement.
``Everything is so good,'' said Jung Woo-chul, an analyst at Mirae Asset Securities. ``The stock price fell because of the sell orders from foreign investors. But that was too much. Every business division is expecting growth this quarter.'' Mirae Asset holds 7.5 percent of NHN shares.
Seoul Securities also said that the firm has passed an ``overshooting'' period over the past two months, resetting its target price at 290,000 won.
December was thought to be a boom month for the country's largest portal site that processes more than 70 percent of all search quarries asked by Koreans. Analysts expected that the presidential election will increase NHN's revenue in ``banner'' advertisements. But the firm's CEO Chae Hwi-young said in November's conference call that the increase won't be as much as expected, as the majority of its sales are from keyword-specific advertisements such as ``flower delivery,'' not from the banner-type ads used by presidential candidates.
With the ads business continuing to prosper, one of its remaining concerns is its expansion to Japan. NHN has been making big investment in building a Japanese web portal service over the past few years. Even Jung, the upbeat analyst of Mirae Asset, expressed doubt about the Japanese search engine project, saying it will need more time to prove itself profitable.
Contrary to the Japan businesses, NHN's Korean operation is showing rapid growth except for the news service. The firm had reported that its third-quarter sales from search-related services grow 55.5 percent year-on-year to 123 billion won, while those from its gaming business surged 119.1 percent to 65 billion won over the same period thanks to increased demand for web-based games.
indizio@koreatimes.co.kr