[Click eStock] Kakao, Solid 2Q Earnings... Ecosystem Strengthening Further Post-COVID-19

2Q Operating Profit Expected at 93.3 Billion KRW... Up 130.6% YoY
Online Advertising Recovery... KakaoTalk Chatroom Advertisers Rapidly Increasing

[Asia Economy Reporter Minwoo Lee] Kakao's operating profit for the second quarter is expected to increase by more than 130% compared to the same period last year. This is due to the recovery of online advertising, which had been somewhat subdued due to the impact of the novel coronavirus disease (COVID-19), as well as the strengthening of ecosystems in various fields such as online shopping, finance, and mobility.

On the 2nd, Eugene Investment & Securities forecasted that Kakao would achieve sales of 908.6 billion KRW and operating profit of 93.3 billion KRW in the second quarter of this year. This represents an increase of 24.0% and 130.6%, respectively, compared to the same period last year. Unlike the first quarter, when marketing expenses were reduced, related budget execution is expected to increase again, but operating profit margin is projected to sufficiently reach 10.3% due to improved profitability in new business sectors.

In particular, online advertising, which had been contracted due to COVID-19, is rapidly recovering on a monthly basis. The Tokboard business, which displays ads in KakaoTalk chatroom lists, is also estimated to have recovered to the daily sales level recorded at the end of last year. Younghoon Joo, a researcher at Eugene Investment & Securities, said, "The increase in Tokboard sales is because the proportion of small and medium-sized advertisers is rapidly increasing," and analyzed, "If the current trend continues, the number of Tokboard advertisers will exceed 10,000 by the end of the year."

The commerce sector is also showing positive trends. Researcher Joo explained, "Until last year, most of the transaction volume in KakaoTalk Gift was generated from exchange products, but after the spread of COVID-19, the area has expanded to delivery products," and added, "The group purchase service Tokdeal and the shopping platform Tokstore are also maintaining high growth rates, which makes the future even more promising." In addition, Kakao's mobile services, covering the entire ecosystem including techfin (technology + finance) and mobility, are becoming more solid.

Based on these factors, Eugene Investment & Securities maintained a 'Buy' investment opinion on Kakao and raised the target stock price to 310,000 KRW. The closing price on the previous day was 269,500 KRW.

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