[Click eStock] "Kakao, Advertising·Entertainment·Game Expectations for Second Half"

Daishin Securities evaluated Kakao's business value at 10.8 trillion KRW using the SOTP method, assuming normal operating profit margins for major business sectors and target multiples by sector, and set a target stock price of 67,000 KRW with a buy investment rating on the 9th.

Kakao is promoting TalkBiz revenue growth through strategies to expand small and medium-sized enterprises by revamping Open Chat, revamping the Friends tab, and changing the message-type advertising business model. Lee Ji-eun, a researcher at Daishin Securities, explained, "Overall, we expect performance improvement in the second quarter compared to the conservative advertising execution in the first quarter, and in the second half compared to the first half, but since most advertising revenue comes from DA, meaningful performance improvement will likely require prior economic recovery."

In entertainment, while the top-line growth of media and stories is slowing, meaningful performance contributions are expected in the music sector as SM's results will be reflected in consolidated earnings from the second quarter. In gaming, performance improvement is expected in the second half when the results of new titles are significantly reflected. The researcher added, "However, due to expected increased investment costs related to artificial intelligence (AI) in 2023, Kakao's performance improvement is expected to be limited," and stated, "Kakao plans to build an AI foundation model, develop vertical services using AI, and release KoGPT 2.0."

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