The information provided should not be considered a recommendation to purchase or sell any particular security. It should not be assumed that any of the securities discussed here were, or will prove to be, profitable.
Video Transcript
The South Korean company Naver is a top 10 holding in TEMIT. It is one of the country’s leading internet platforms – think of it as a mix of Google and Amazon. It’s the country’s dominant search engine, with over 70% market share – that’s the Google part. They have then successfully integrated search with payments and commerce - that is the Amazon part. This combination has seen the business evolve into one of the leading e-commerce platforms in the country.
Aside from its core business, Naver also has a minority stake in ZHD Group – one of the largest internet companies in Japan. We like the company because of its market leading position and additional options for growth.
Naver's sustainable earnings power comes from its "top of funnel" position for Korean internet users. Naver's search and shopping has become the gateway for Korean users to find information and discover products, which Naver is able to monetise via advertising or commission revenue.
We also see significant growth potential for many related platform businesses including cloud computing, financial services and entertainment – again similar to Amazon and its Prime membership benefits. Naver’s entertainment content includes music streaming, videos and Webtoons. Webtoons are a type of digital comic that originated in South Korea but are increasingly popular internationally by being very easy to read whilst scrolling through your smartphone.
This stock has had a difficult year as margins have weakened due to investments in new high growth areas but we remain confident the business is on the right path with strong opportunities for its content business, and meaningful growth ahead in cloud services and fintech in the domestic market.
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Shares in TEMIT qualify as an investment which can be held through an ISA. TEMIT is available through a stocks and shares ISA from a number of different companies. Your financial adviser will be able to give you full details of the options available to you.
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This information is issued and approved by Franklin Templeton Investment Management Limited (FTIML). It does not constitute investment advice. The information provided should not be considered a recommendation to purchase or sell any particular security. It should not be assumed that any of the security transactions discussed here were or will prove to be profitable. These opinions are not intended to be a forecast of future events, research, a guarantee of future results or investment advice. Past performance is not a guide to future returns. The return may increase or decrease as a result of fluctuations in the markets, in currency and/or in the portfolio.
Market and currency movements may cause the capital value of shares, and the income from them, to fall as well as rise and you may get back less than you invested. The analysis of Environmental, Social and Governance (ESG) factors form an important part of the investment process and helps inform investment decisions. The strategy does not necessarily target particular sustainability outcomes. The opinions contained in this document are those of the named manager(s). They may not necessarily represent the views of other managers, strategies or funds. Shares in investment trusts are traded on a stock market and the share price will fluctuate in accordance with supply and demand and may not reflect the value of underlying net asset value of the shares. The majority of charges will be deducted from the capital of the company. This will constrain capital growth of the company in order to maintain the income streams.