NAVER’s Influence to Grow in Japan
The author is an analyst of NH Investment & Securities. He can be reached at jaemin.ahn@nhqv.com. -- Ed.
NAVER’s subsidiary LINE and Softbank’s subsidiary Z Holdings finally merged to form New Z Holdings. NAVER holds a 50% stake in A Holdings, the parent company of Z Holdings, which should further expand the influence of its Internet business not only in Korea but also in Japan.
NAVER’s influence to grow in Japan
- We maintain a Buy rating on NAVER and raise our TP from W450,000 to W550,000 to reflect both the firm’s rising corporate value following the launch of New Z Holdings and Coupang’s upcoming listing.
- Established through the integration of LINE (a NAVER subsidiary) and Z Holdings (SoftBank subsidiary) on Mar 1, we expect New Z Holdings to wield strong influence in the Japanese Internet industry.
- NAVER holds a 50% stake in A Holdings, which has a 65.3% stake in New Z Holdings, and global investment officer Lee Hae-jin has been appointed as chairman of A Holdings. NAVER plans to expand its alliance-based influence through M&As with companies such as Z Holdings, Big Hit, CJ Logistics, Studio Dragon, and Wattpad, and create synergy in areas of ads, commerce, and AI in which NAVER directly operates. For example, New Z Holdings aims to launch Smart Store in 1H21 to strengthen its commerce competitiveness.
To show high ad, commerce, and fintech business growth in Japan
- We expect the influence of New Z Holdings in Japan’s ad, commerce, and fintech arenas to grow. The firm’s ad business should see portal and messenger synergies, and the commerce business’s influence will likely expand through the introduction of X Shopping and Smart Store. Finally, the fintech business should gradually integrate PayPay and LINE Pay. For reference, New Z Holdings offered 2023 sales and OP guidance of JPY2tn and JPY225bn, respectively, and announced plans to invest JPY500bn over five years.
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