[Click eStock] "Kakao to Stall Until Year-End... Overseas Performance Next Year Should Be Watched"

TokBiz, Mobility, and Pay Show Slight Growth Slowdown in 3Q
"Overseas Successes like 'Piccoma' Key to Next Year's Growth"

[Asia Economy Reporter Minwoo Lee] There are calls to adopt a conservative investment strategy for Kakao until the end of the year. This is based on the judgment that the rapid growth may slow down somewhat as we enter the 'with COVID-19' era. Analysts emphasize the need to focus on the potential recovery of corporate value depending on the performance of overseas businesses next year.

On the 9th, KTB Investment & Securities made this assessment of Kakao. In the third quarter of this year, Kakao recorded consolidated sales of 1.7408 trillion KRW and operating profit of 168.2 billion KRW. Although these figures represent increases of 58.2% and 39.9% respectively compared to the same period last year, the operating profit fell short of market expectations (consensus) by 24.1%. This is seen as a sign that medium- to long-term growth expectations have somewhat cooled.

Kakao's main revenue source, the 'TalkBiz' business based on KakaoTalk advertising and commerce, saw sales increase by only 3.7% compared to the previous quarter. Platform other sales, including mobility and payment services, also grew by just 3.5% quarter-on-quarter, indicating a slight slowdown in growth. Jin-gu Kim, a researcher at KTB Investment & Securities, explained, "Mobility saw a decrease in revenue from designated driver services and a reduction in revenue per vehicle due to an increase in franchisees centered on individual taxis. Payment services experienced a decline in financial service revenue compared to the previous quarter due to government loan regulations." He added, "Aside from increased equity method gains from major corporations such as Dunamu, positive factors in the third-quarter performance were limited."

There is a possibility that variables such as negotiations on appropriate fees with suppliers in business sectors like mobility and entertainment, affected by domestic regulations, could negatively impact next year's performance. Overseas business performance is therefore seen as crucial to offset this. Researcher Kim stated, "Kakao's webtoon platform 'Piccoma' has led to a positive assumption regarding its entry into Europe, resulting in an upward revision of Kakao Japan's corporate value from 8.4 trillion KRW to 10.4 trillion KRW. However, Piccoma's total merchandise sales (GMV) this year are expected to reach 755 billion KRW, falling 25% short of the target of 1 trillion KRW." He concluded, "Therefore, it is necessary to monitor whether expectations centered on Western markets can translate into increased performance next year."

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