[Click eStock] "Kakao, Uncertainty over SM Acquisition and Platform Regulation Concerns... Target Price Down"

Yuanta Securities lowered the target price for Kakao from 65,000 KRW to 65,000 KRW on the 10th. The investment rating was maintained as 'Buy.'

Kakao recorded sales of 2.1609 trillion KRW and an operating profit of 140.3 billion KRW in the third quarter. Compared to the same period last year, sales increased by 2%, but operating profit decreased by 7%. In particular, excluding SM Entertainment, operating profit decreased by 23%. Net income attributable to controlling interests fell by 69% to 33.3 billion KRW, and excluding SM, it turned to a loss of 42.9 billion KRW.

In the fourth quarter, thanks to the high growth maintained by the commerce and major subsidiary business divisions, performance improvement is expected to continue due to the advertising peak season effect. Kakao also plans to launch AI services based on its various customer touchpoints.

Changyoung Lee, a researcher at Yuanta Securities, said, "Performance improvement is expected next year as growth in advertising, commerce, and major business divisions continues. However, uncertainties related to the SM acquisition (such as the sale of Kakao Bank shares and the invalidation of the SM acquisition) and government platform regulations leading to pressure to reduce platform fees (such as mobility) remain uncertain factors. We are lowering the target price to reflect the decline in the corporate value of consolidated subsidiaries and various uncertainties related to the SM acquisition."

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