[Click eStock] "Kakao Expected to Grow Earnings Next Year... Target Price Up"

"The Worst Phase Passed... Efforts Underway for Management Reform"

NH Investment & Securities on the 21st raised the target price for Kakao from 57,000 KRW to 68,000 KRW, stating that "performance growth is expected next year due to management reform efforts." The buy rating was also maintained.

On the same day, researchers An Jaemin and Kim Dohee from NH Investment & Securities said, "The deteriorated market sentiment has been largely reflected in the stock price, and recovery is now expected. The management is showing reform efforts, and stable growth in performance is anticipated."

Researcher An said, "With expectations of interest rate cuts being factored in, the stock prices of internet companies, which represent growth stocks, are rebounding. The concerns that affected Kakao's stock price over the past few months have gradually entered a resolution phase," adding, "Considering the preparation for appointing a new CEO and management reform led by Chairman Kim Beom-su, the founder, it is judged that the worst phase has passed."

On the 11th, Chairman Kim mentioned changes such as restructuring group governance, redefining corporate culture, and focusing on core businesses during a meeting with executives and employees. On the 18th, the ‘Compliance and Trust Committee’ was launched for external control, marking the start of preparations to rectify Kakao.

However, concerns remain as the trial related to the ‘SM Entertainment stock manipulation case’ is still ongoing, and the government’s attempt to legislate platform regulations also poses risks. Researcher An noted, "The target price increase is due to upward revisions of performance estimates after this year and changing the base year for target price calculation to next year."

Regarding Kakao’s performance next year, it is expected that "revenue will increase by 15.5% to 9.46 trillion KRW compared to this year, and operating profit will rise by 20.8% to 581.6 billion KRW," analyzing that "the KakaoTalk tab reorganization and the resulting increase in ad exposure, subsidiary performance growth, workforce restructuring, and cost reduction efforts will contribute to performance growth." Researcher An added, "if the economy recovers after the second half of the year, performance growth could improve faster than expected," but also said, "we are still estimating conservatively."

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