[Click eStock] "Kakao, Solid Earnings but Growth Stock Faces Challenges... Target Price Down"

[Asia Economy Reporter Kwon Jae-hee] NH Investment & Securities maintained a 'Buy' rating on Kakao on the 16th but lowered the target price from the previous 140,000 KRW to 110,000 KRW.

This is due to concerns over the valuation decline of growth stocks caused by external factors such as economic slowdown, inflation, and interest rate hikes, as well as worries about the advertising and commerce businesses, which are sensitive to the economy.

Additionally, the potential sale of Kakao Mobility and the possibility of acquiring SM Entertainment are also cited as factors weighing on the stock price.

Ahn Jae-min, a researcher at NH Investment & Securities, stated, "The recently raised possibility of selling Mobility contradicts Kakao's previous business expansion strategy, which was based on connecting everything through Talk as mentioned by Kakao. At this point, when monetization is beginning in earnest, it is questionable whether securing cash through a sale will be positively evaluated."

However, Kakao's business is still progressing smoothly, and it is expected to show solid performance growth this year as well. Advertising is recovering from a sluggish first quarter with reopening-related keywords showing improvement, and it is expected to grow along with commerce based on AlimTalk. Mobility is also maintaining a favorable growth trend with revenue growth, price increases, and business model expansion following the reopening.

The recently unveiled Kakao Universe is also a positive factor for revenue expansion. This is a strategy to bundle various services owned by Kakao into one, and especially the open link based on interests is expected to significantly expand the KakaoTalk ecosystem, which is currently composed of acquaintances.

Researcher Ahn analyzed, "External variables such as economic slowdown are causing concerns for Kakao's performance and stock price, but the results of individual businesses are favorable," and added, "Performance momentum is expected to be highlighted again from the second quarter."

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