[Click eStock] "KakaoPay, Profitability Recovery Delay and High Valuation Burden"

On the 2nd, Korea Investment & Securities evaluated that Kakao Pay's profitability recovery is delayed. Accordingly, they maintained a 'neutral' investment rating and did not disclose a target price.

Researcher Jeong Ho-yoon of Korea Investment & Securities stated, "In the second quarter, Kakao Pay's revenue and operating loss recorded 148.9 billion KRW and 12.6 billion KRW respectively, slightly missing the consensus." Revenue increased by 11.0% compared to last year, but the operating deficit continued.

Specifically, the payment service recorded 108.1 billion KRW, up 15.3% year-on-year. Growth in offline and overseas payments led to performance improvement. Overseas payments grew by 90% compared to last year, and the revenue share of payment services rose to double digits.

Financial services revenue recorded 34.6 billion KRW, a 3.5% increase year-on-year. Both loan brokerage and MTS fees from Kakao Pay Securities showed significant growth. Notably, overseas stock trading volume increased sharply.

Researcher Jeong explained, "It is expected to become a growth driver for financial services revenue in the future." Operating expenses increased by 10.1% to 161.4 billion KRW, with personnel expenses and marketing costs at 47.2 billion KRW (+1.2% YoY) and 14.2 billion KRW (-11.0% YoY), respectively, reducing the burden.

Jeong evaluated that the delay in profitability recovery is concerning. However, he added that the rebound in the growth rate of payment services, which had been declining since 2021, is positive. Especially, the high growth in overseas payment revenue due to increased overseas travel is seen as a structural change, and the trend of growth rate recovery is expected to continue.

Jeong assessed, "Operating profit margin has not improved and has remained around -10% since 2021," explaining, "This is because the sales scale of the financial business division has not shown significant growth compared to 2021."

He added, "From the second half of the year, as the contribution of MTS fees to revenue increases, gradual profitability improvement is expected," and noted, "The high valuation compared to global fintech companies remains a burden." This implies that it is not too late to gradually buy while confirming profitability improvement.

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