[Click eStock] "KakaoPay Posts 3Q Results Exceeding Expectations... Anticipating Strong 4Q Season"

[Asia Economy Reporter Myunghwan Lee] Shinhan Investment Corp. announced on the 2nd that it maintains a buy rating and a target price of 40,000 KRW for KakaoPay. This is due to the expectation of increased sales in the peak season of the 4th quarter and the anticipated expansion of the advertising business.

KakaoPay's sales in the third quarter of this year reached 141.4 billion KRW, a 5.4% increase compared to the previous quarter, while operating losses continued at 9.7 billion KRW. These figures exceeded Shinhan Investment Corp.'s estimate (-13.8 billion KRW) and market expectations (-5.9 billion KRW). The monthly active users (MAU) stood at 23 million, a 5% increase from the previous quarter. The MAU of paying users increased by 7.1% during the same period to 19.7 million, accounting for 85.8% of total users. Shinhan Investment Corp. diagnosed that the growth rate of paying users surpassing that of general users indicates a continuous influx of users with high purchasing power.

Shinhan Investment Corp. expects that sales growth can be anticipated in the 4th quarter, the peak season for the 'Gift' service. This is because seasonality in payment service sales can be confirmed through commemorative events such as Pepero Day and Christmas. Shinhan Investment Corp. forecasts KakaoPay's 4th quarter sales contribution transaction volume (RTPV) to increase by 37% year-on-year to 9.6 trillion KRW, and consolidated payment service sales to grow by 15% to 101.7 billion KRW. They also pointed out that the ability to view gift exchange records on KakaoTalk, the main platform, further activates the gift service.

KakaoPay's advertising business is also expected to grow in scale. KakaoPay has started an inventory-type display advertising business as a new business and is preparing additional product advertising services. Although the sales contribution is currently low due to the early stage of the business, considering that the parent company Kakao's portal business annual sales exceed 400 billion KRW, this could become a major business division accelerating future sales growth, according to Shinhan Investment Corp.'s analysis.

Heeyeon Lim, Senior Researcher at Shinhan Investment Corp., stated, "Because it is a financial business, it is strictly regulated by the government, so if the advertising service sales proportion exceeds that of the core payment and financial services, some valuation discount compared to other platforms with high advertising sales proportions is inevitable," adding, "It is necessary to monitor future advertising sales growth."

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