[Click eStock] KakaoPay Plummets 70% Impact... Kakao's Target Price 'Downgraded'

Daol Investment & Securities Lowers Target Price by 37% Today
IBK Investment, Hyundai Motor, Ebest Also Cut Target Prices

[Image source=Yonhap News]

[Asia Economy Reporter Ji Yeon-jin] Securities firms have recently been lowering their target prices for Kakao one after another. Following a halving of the stock price in this year's crash triggered by US monetary tightening, concerns about slowing growth have also emerged, leading to a significant downgrade in the company's valuation expectations.

On the 11th, Ebest Investment & Securities maintained a buy rating on Kakao but lowered the target price by 29.5%, from 105,000 KRW to 74,000 KRW. This adjustment was due to a slight downgrade in the Q3 earnings forecast for this year and a reassessment of the corporate value of major platform subsidiaries.

Seong Jong-hwa, a researcher at Ebest Investment & Securities, stated, "Without reflecting aggressive valuations for platform subsidiaries and based on current performance standards using general basic valuation, the stock was somewhat overvalued," adding, "We believe it is a time to wait until the macro environment stabilizes and the potential of the platform is re-highlighted."

The securities firm forecasted Kakao's consolidated revenue for Q3 this year to reach 1.8669 trillion KRW, a 7.2% increase year-on-year, and operating profit to rise by 9.7% to 184.5 billion KRW. Although this indicates steady growth, it falls short of market expectations.

Daol Investment & Securities also lowered Kakao's target price from 100,000 KRW to 63,000 KRW on the same day. They increased the discount rate on the value of Kakao's listed subsidiary shares from the previous 30% to 50%, resulting in a 37% reduction.

Kim Jin-woo, a researcher at Daol Investment & Securities, said, "An increase in sales growth in the Talk Biz segment is the trigger for Kakao's stock price rebound," and added, "We maintained the buy rating as we believe there is a high possibility of enhancing the company's value."

Earlier, Hyundai Motor Securities and IBK Investment & Securities also lowered their target prices for Kakao to 90,000 KRW and 93,000 KRW, respectively.

Meanwhile, Kakao Games' stock price fell 56.5%, from 91,000 KRW at the end of last year to 39,600 KRW on the 7th. During the same period, on the Korea Exchange, Kakao Bank dropped 68.9% (from 59,000 KRW to 18,350 KRW), and Kakao Pay plummeted 77.0% (from 174,500 KRW to 40,100 KRW). Notably, both Kakao Bank and Kakao Pay fell below half of their IPO prices (Kakao Bank at 39,000 KRW and Kakao Pay at 90,000 KRW).

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