[Click e-Stock] "Kakao Stock Price Attractive, This Year's Revenue Estimates Lowered"…Target Price Down

[Asia Economy Reporter Ji Yeon-jin] DB Financial Investment announced on the 14th that it lowered the target price for Kakao to 150,000 won by revising down this year's sales estimates and applied multiples.

Hwang Hyun-joo, a researcher at DB Financial Investment, said, "Recently, interest rate and regulatory issues have acted as variables causing the stock price to underperform," adding, "However, there are sufficient factors for performance improvement and growth in 2022, and the current stock price is judged to be in an attractive range, so the investment opinion remains a buy."

Kakao's fourth-quarter sales last year are expected to increase by 38% year-on-year to 1.71 trillion won, while operating profit is projected to fall 9% to 136.3 billion won, missing expectations. Due to government regulatory issues leading to service reductions and strengthened social distancing measures, growth in Pay and Mobility slowed, but advertising performed well thanks to the peak season and activation of Talk Channel, and commerce transactions expanded during the year-end shopping peak season, continuing high growth in Talk Biz is expected.

The content sector is expected to shrink in size compared to the previous quarter due to a decrease in Odin sales. Labor costs are expected to rise significantly due to incentive payments from Kakao Ventures and increased stock compensation expenses. Profitability is expected to deteriorate as marketing expenses remain high following the previous quarter.

Researcher Hwang said, "Kakao's growth potential is expected to be highlighted again this year," adding, "While advertising and commerce continue to advance, the impact of government regulatory issues caused a pause, but the mid- to long-term performance improvement story for Mobility and Pay remains valid." He also forecasted that the global expansion of the paid content business and the concrete strategies of new blockchain and NFT-related businesses underway within the Kakao community will become the main points of interest this year.

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