Kakao 1Q Operating Profit Up 187%... Strong Resilience Despite COVID-19 Economic Slowdown

Secured 500,000 New Securities Accounts in One Month
KakaoPay Transaction Volume Continues Steady Growth
Strong Advertising Revenue + Financial Platform Expansion Boost Performance and Market Dominance

[Asia Economy Reporter Minwoo Lee] Despite concerns over economic slowdown due to the impact of the novel coronavirus disease (COVID-19), Kakao showed steady growth. It is expected to advance more rapidly as a financial platform through its tech-fin (technology + finance) competitiveness linked with securities, online e-commerce, and centered on Kakao Pay.

According to Shin Young Securities on the 12th, Kakao is expected to record sales of 934.1 billion KRW and operating profit of 79.5 billion KRW in the first quarter of this year. Sales are analyzed to increase by 32.3% and operating profit by 187.3% compared to the same period last year. Although advertising demand decreased due to the economic slowdown caused by COVID-19, resulting in reduced portal advertising revenue, KakaoTalk-based advertising (Talk Biz) sales were relatively strong. Additionally, sales in the content sector increased due to the impact of 'social distancing.' In fact, first-quarter content sales are estimated to have increased by 21.3% year-on-year to 476.8 billion KRW.

The evolution into a financial platform is also expected to accelerate. The transaction volume of the simple payment service Kakao Pay continues to grow, and Kakao Pay Securities, launched in February, is expanding smoothly. Kakao Pay Securities secured 500,000 new accounts within one month of launching the securities account opening service through the Kakao Pay upgrade. Yoon Eul-jung, a researcher at Shin Young Securities, said, "With securities joining Pay and Bank on Kakao's tech-fin platform, expansion into various financial service areas such as fund sales, insurance product sales, and brokerage is becoming visible," adding, "As revenue generation from these new businesses is beginning in earnest, growth in performance and expansion of market dominance are expected."

Accordingly, Shin Young Securities maintained a 'Buy' investment opinion on Kakao and kept the target stock price at 220,000 KRW. The closing price on the previous trading day was 158,000 KRW.

This content was produced with the assistance of AI translation services.