[Click eStock] "KakaoPay, Continued Operating Losses... Importance of New Service Sales Contribution in Second Half"

[Asia Economy Reporter Lee Jung-yoon] Korea Investment & Securities maintained its buy rating and target price of 95,000 KRW for Kakao Pay on the 3rd, stating that although the operating loss widened in the second quarter earnings and fell short of consensus estimates, the contribution of new services to revenue in the second half will be crucial.

Kakao Pay's second-quarter revenue was recorded at 134.1 billion KRW, a 22.8% increase compared to the same period last year, while the operating loss continued at 12.5 billion KRW.

The payment business division's revenue was 93.8 billion KRW, up 35.7% year-on-year, with payment transaction volume growing 35% both online and offline in the second quarter. Notably, the number of merchants, which forms the foundation of the business, increased by 31.3% to 1.66 million. The financial business division's revenue was 33.4 billion KRW, down 1.1% year-on-year but up 40.3% compared to the previous quarter. Financial service-related transaction volume grew 37% quarter-on-quarter. The loan service transaction volume reached its highest level since launch.

Operating expenses rose 24.9% year-on-year to 146.6 billion KRW. Due to increased payment transaction volume and costs related to building the Mobile Trading System (MTS) and insurance systems, commission fees increased 28.4% to 64.8 billion KRW. Marketing expenses increased 22.6% to 16 billion KRW due to increased marketing related to MTS and payments.

However, despite concerns about an economic downturn, the high growth in payment transaction volume is viewed positively. Jeong Ho-yoon, a researcher at Korea Investment & Securities, explained, "Payment service revenue is expected to continue high growth not only online but also offline due to merchant expansion and changes in user behavior. Financial services have renewed record-high transaction volumes in loan services, and with an expanded product portfolio, growth is expected to continue in the second half."

He added, "Since the launch of MTS, retail-related commission revenue has increased, and new revenue sources such as credit lending will be added from the second half. Insurance will also see new service launches such as insurance comparison services, making related revenue expected from the second half."

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