[Click eStock] KakaoBank Decline Seen as Buying Opportunity... Target Price Lowered Due to Slowing Growth

by Lee Myeonghwan

Published 10 Feb.2022 07:49(KST)

[Click eStock] KakaoBank Decline Seen as Buying Opportunity... Target Price Lowered Due to Slowing Growth

[Asia Economy Reporter Myunghwan Lee] SK Securities announced on the 10th that it has upgraded its investment rating on KakaoBank from neutral to buy, citing the stock price decline as creating upside potential. However, the target price was lowered by 16% from the previous 64,000 KRW to 54,000 KRW, considering factors such as rising interest rates and the slowdown in household loan market growth.

KakaoBank's revenue last year was 1.0649 trillion KRW, and operating profit was 256.9 billion KRW, representing increases of 32.4% and 109.7% respectively compared to the previous year. Annual net income also rose by 79.6% to 204.1 billion KRW during the same period. For the fourth quarter of last year, revenue increased by 45.4% year-on-year to 309.1 billion KRW, and operating profit grew by 109.7% to 52 billion KRW. SK Securities pointed out that KakaoBank's net income for the fourth quarter was 36.2 billion KRW, lower than the market forecast of 57 billion KRW.

SK Securities analyzed that attention should be paid to KakaoBank's long-term strategy rather than its past performance. Researcher Kyunghoe Koo of SK Securities said, "What investors expect from KakaoBank is not immediate profits but building a customer base capable of properly competing with major banks in the future," adding, "For that, how the loan growth trend progresses is important."

SK Securities sees the recent sharp stock price decline due to the U.S. Federal Reserve's tightening as an investment opportunity. Researcher Koo stated, "Unlike other bank stocks, KakaoBank experienced a larger decline, which reflects the bursting of a bubble formed by supply and demand factors during its initial public offering," and added, "For investors who thought KakaoBank was expensive, this could serve as an investment opportunity."

He predicted, "In the long term, KakaoBank's advantages as a mega-platform affiliate and the superiority of its branchless revenue model are issues that will continue regardless of changes in the stock market environment."