[Click eStock] "Kakao's New Business Expansion Strategy Fails... Target Price Down"

"Importance of the New CEO's Reform Strategy"

NH Investment & Securities evaluated that it is difficult for Kakao to continue its past growth strategies such as new business expansion, emphasizing the importance of the new CEO's reform strategy. Accordingly, they maintained a 'Buy' investment rating but lowered the target price to 69,000 KRW.

Jaemin Ahn, a researcher at NH Investment & Securities, stated, "Kakao's first-quarter revenue is expected to be 1.97 trillion KRW, up 21.1% year-on-year, and operating profit is expected to surge 93.6% to 121.2 billion KRW, slightly below consensus."

Specifically, although it is an off-season, advertising revenue is expected to grow 7.1% from last year to 207 billion KRW, and the commerce business is expected to increase 2.1% to 237.5 billion KRW, showing growth potential. On the other hand, due to the sluggish drama production market, media business revenue is expected to decrease to 83.3 billion KRW, and the webtoon business is also expected to perform poorly at 226.8 billion KRW. Incentives not recognized in the previous quarter are reflected again in the first quarter, and labor costs are estimated to increase 8.0% from last year to 483.8 billion KRW.

However, Researcher Ahn forecasted operating profit for 2024 to increase 34.4% from last year to 619.2 billion KRW. He analyzed, "The increase in first-tab traffic will continue, sustaining the growth in advertising revenue," and "Revenue generation from the new business, Kakao Healthcare, is also expected to positively contribute to performance."

Meanwhile, Researcher Ahn added, "During the 2023 audit report submission process, Kakao Mobility's net sales recognition and the accounting standards for gift-giving were changed," and "Although past revenue and operating profit decreased, it is not a major issue."

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