by Kim Minyoung
Published 05 Apr.2024 08:22(KST)
On the 5th, Korea Investment & Securities lowered the target price for Kakao by 9% to 68,000 KRW, citing a downward revision in revenue estimates for TokBiz. The investment rating was maintained at 'Buy.'
Jung Ho-yoon, a researcher at Korea Investment & Securities, stated in a report on the same day, "Due to changes in the accounting recognition method of Kakao Commerce, we have lowered the revenue estimate for TokBiz by 8.2%, and also reflected the decrease in equity value due to the decline in stock prices of major listed subsidiaries. Since the growth potential of business units excluding advertising commerce is generally declining, a strategy to reverse this trend is necessary," he analyzed.
Kakao's first-quarter revenue is expected to be 1.97 trillion KRW, with an operating profit of 110.8 billion KRW, falling short of consensus. Both commerce and advertising are expected to continue growing compared to the same period last year, but revenue is anticipated to decline compared to the fourth quarter due to the off-season effect in advertising.
Researcher Jung Ho-yoon wrote, "Restructuring of new businesses such as enterprise has reduced labor costs, and marketing is being conducted as restrictively as possible, but the operation of a new data center increases depreciation expenses by 20 billion KRW, which is a burden."
He viewed the content division's sluggishness as a burden on performance. Jung Ho-yoon said, "The content division's underperformance seems to be holding back results. With Naver Webtoon’s IPO approaching, competition in major markets is intensifying, and Kakao is increasing marketing investment in webtoons again. Kakao Entertainment’s dramas are also experiencing scheduling delays due to difficulties in programming," he added.
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