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HyperCLOVA X and AI business strategy unveiled

Strong synergies expected in ads and commerce

Once NAVER fully integrates its generative AI search service Cue, we anticipate ad pricing gains to accelerate to over 15% YoY. We also expect the introduction of HyperCLOVA X to help reverse the slowdown in GMV growth. According to NAVER, the application of HyperCLOVA X-based AI targeting to internal marketing led to a threefold increase in the conversion rate. Once multi-modal (images plus text) searches are introduced, we expect to see an accelerating move toward hyper-personalization, with product exposures tailored to specific locations and individuals.

Maintain Buy and TP of W290,000

We expect NAVER to see sustained momentum in the coming months, backed by the release of a flurry of generative AI services (including Cue, which is set to be integrated into search services in November following a beta release in September). Valuation also remains inexpensive, at a 2024F P/E of 26x. We view current levels as an attractive entry point, given: 1) the company’s AI story; 2) ongoing margin improvements driven by cost efficiency; and 3) the possibility of a domestic ad market rebound. We continue to recommend the stock as our top internet pick.









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