[Click eStock] "Kakao, Long-term Momentum Remains Despite COVID-19 Impact"

Mirae Asset Daewoo Issues 'Buy' Investment Rating and Sets Target Price at 243,000 KRW... Closing Price on 16th at 165,500 KRW

[Asia Economy Reporter Kum Boryeong] Although the negative impact of the novel coronavirus infection (COVID-19) is expected to affect Kakao's performance, the long-term momentum remains intact, according to an analysis.

On the 17th, Mirae Asset Daewoo estimated Kakao's first-quarter revenue and operating profit to have increased by 21% and 161% year-on-year, reaching 856 billion KRW and 72 billion KRW, respectively. Reflecting the recent contraction in the advertising market, the revenue and operating profit forecasts for this year were revised downward by 6.3% and 16.7%, respectively, compared to previous estimates.

However, the audit reports of subsidiaries from last year are considered meaningful. Kim Chang-kwon, a researcher at Mirae Asset Daewoo, stated, "Based on last year's revenue, Kakao Commerce grew sharply by 1206%, Kakao Mobility by 82%, Kakao Pay by 103%, and Kakao Bank by 77% compared to the previous year. Profitability improvements were also observed simultaneously in subsidiaries, such as Kakao Bank's return to profitability and Kakao Page's operating profit margin expansion (from 6% to 12%)." He added, "During the first quarter of this year, positive factors such as a surge in Kakao Pay's financial product sales, new mobility businesses like Venti Taxi, and a decrease in remittance fees are expected to have occurred in these subsidiaries."

Mirae Asset Daewoo gave Kakao a 'Buy' investment rating with a target price of 243,000 KRW. The closing price on the 16th was 165,500 KRW. Researcher Kim said, "The IPO plans for subsidiaries such as Kakao Page and Kakao Bank this year or next year are still considered valid long-term stock momentum. Kakao is leading the growth of the non-face-to-face internet industry, including e-commerce, Talk Biz advertising products, financial platforms, webtoons, music content, and mobility services such as ride-hailing." He added, "In the post-COVID-19 era, these non-face-to-face (untact) businesses will become more widespread, and the possibility of government deregulation is increasing, raising expectations for Kakao's performance momentum."

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