[Click eStock] "Kakao, Weak Q2 but Margin Improvement Expected in Second Half"

[Asia Economy Reporter Kwon Jae-hee] Hana Securities on the 8th issued a buy rating and a target price of 135,000 KRW for Kakao.

Hana Securities estimated Kakao's Q2 revenue at 1.8502 trillion KRW and operating profit at 168 billion KRW. This represents an increase of 36.8% and 3.3% respectively compared to the previous year. Despite commerce facing an off-season slump, Talk Biz revenue is expected to maintain a steady growth rate in advertising, resulting in an annual growth rate of 20%. Platform other revenue is also estimated to grow by 39% annually as mobility benefits from reopening momentum. The gaming division, which contributes most to Q2 revenue growth, is expected to see Odin's global daily sales reach around 2 billion KRW, and Uma Musume's strong initial launch is anticipated to drive growth of over 100 billion KRW compared to the previous quarter. The slower growth in operating profit relative to revenue growth is due to the content division, including games and webtoons, which have high commission rates and are expected to account for nearly 50% of total company revenue. The ratio of variable costs to revenue is expected to rise by 1.1 percentage points from 35.4% in Q1. The concentrated marketing expenses related to Uma Musume's launch and webtoons in Q2 also contributed to margin pressure.

Yoon Ye-ji, a researcher at Hana Securities, analyzed, "Talk Biz revenue is expected to fall short of expectations due to commerce's sluggish performance in Q2. However, the total transaction amount is expected to reach 10 trillion KRW annually, supported by a decrease in the proportion of direct purchases within Gift Talk, which was previously recognized as total sales, and the exclusion of new businesses such as Zigzag and Grip, which are expected to have an annual transaction volume of about 2 trillion KRW this year."

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