[Click eStock] "KakaoPay, Valuation Still High"

Q3 Operating Profit Expected to Fall Short

Kakao Pay / Photo by Jinhyung Kang aymsdream@

DB Financial Investment analyzed on the 7th that Kakao Pay's valuation is still high and higher growth is needed. The investment opinion 'Hold' and the target price of 53,500 KRW were maintained.

Jung Kwang-myung, a researcher at DB Financial Investment, stated, "The third quarter revenue was 158.9 billion KRW, a 12.4% increase compared to the previous year, but the operating loss was 9.5 billion KRW, slightly below estimates."

Looking at the details, the transaction amount of financial services increased by 13% compared to last year, and stock transaction volume rose by 44% compared to the previous quarter. Payment revenue increased by 17.2% compared to last year, similar to the growth rate of payment amounts, but financial service revenue only rose by 0.7% compared to last year due to a significant increase in loan transactions with lower commission rates.

Other service revenue increased by 9.3% compared to last year, influenced by increased card brokerage revenue and advertising service revenue despite the elimination of remittance fees. Although operating losses continued due to subsidiary costs, the operating loss margin narrowed compared to the previous quarter (12.6 billion KRW).

Researcher Jung evaluated, "In the payment sector, offline and overseas payments seem to be leading the increase in payment amounts." He also analyzed, "Loan services showed an increase in loan transaction amounts through additional loan product handling despite sluggish credit loans, and the growth rate of securities transaction volume significantly exceeded the market growth rate." He further explained, "Although insurance service revenue was not disclosed, it appears to have started contributing to financial service revenue from the third quarter."

While the high total payment volume (TPV) growth through new services is positive, it is still deemed insufficient. Researcher Jung pointed out, "However, considering that the commission rates of newly introduced services are lower than those of existing services, higher TPV growth is necessary for future high revenue growth."

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