New Membership Program to Boost Businesses

The author is an analyst of Shinhan Investment Corp. He can be reached at mj1224@shinhan.com. — Ed.

NAVER launched NAVER Plus Membership on June 1 and plans to introduce NAVER Bankbook within the month. The new services are expected to strengthen the lock-in effect in commerce based on the NAVER Pay infrastructure and accelerate the expansion of financial services. NAVER Plus Membership has a monthly subscription fee of KRW4,900 and rewards points for payments made via NAVER Pay (basic 1% plus additional 4% for monthly payments up to KRW200,000). NAVER Bankbook will offer a 0.5%p higher reward for Pay Point top-up. The company will thus create an e-commerce ecosystem where the customers can benefit the most when shopping using NAVER Bankbook and NAVER Pay.

NAVER should see a boost to growth of its relatively weak contents. On top of point rewards, the membership program offers a choice of four from five services: 20 cookies for NAVER Webtoon/Series (10 previews), 300 streams for VIBE (unlimited music streaming for additional monthly fee of KRW3,850), KRW3,300 cash points for NAVER SERIES ON (video streaming), 100 GB storage for NAVER Cloud, and discount coupons for NAVER Audio Clip. The music streaming benefit is attractive even with an additional monthly fee, which should help increase the number of subscribers. Cookies and cash points offered for webtoon and video streaming are also expected to lift payment rates.

Demand for digital services on the rise in Japan

NAVER should benefit from the digitalization of the markets in Japan and Southeast Asia via its subsidiaries. LINE WORKS saw its weekly subscriber count jump 23 times from the start of the year. This goes to show the overwhelming power of Korea’s no.1 messaging platform Kakao. NAVER should see synergy in messaging platform, portal, and commerce after the completion of the business integration of LINE and Z Holdings.

Target price raised by 26.7% to KRW285,000

Our target price for NAVER is raised by 26.7% to KRW285,000. We revised up the value of the portal business following the rebound in global tech stocks. We also priced in NAVER Webtoon’s acquisition of LINE Manga and transaction growth, and the heightened value of financial services with the launch of new services. The shift to digital channels is accelerated by the COVID-19 pandemic. Demand for digital services will keep growing once the conversion is made.