Kakao, Which Rose Over 50% Last Year, Continues Its Soaring Run This Year

Six Consecutive Trading Days of Gains and a New 52-Week High in One Day
Brokerages Raise Target Prices One After Another

[Asia Economy Reporter Song Hwajeong] Kakao, which rose more than 50% last year, continues its high-flying run this year by repeatedly hitting new all-time highs.

As of 9:20 a.m. on the 14th, Kakao was trading at 181,000 KRW, up 1.12% (2,000 KRW) from the previous day. During the session, it rose to 184,500 KRW, setting a new 52-week high again in just one day. Kakao had risen for six consecutive days until the previous day and touched 180,000 KRW during the session, marking a new high. Since the beginning of the year, Kakao has been on a streak of new highs, breaking through the 160,000 KRW level and rising to the 170,000 KRW range. After a brief pause, it appears to have reignited its upward momentum.

With last year's fourth-quarter earnings surpassing market expectations, the stock price rally is expected to gain further momentum. Kakao's fourth-quarter revenue and operating profit recorded 867.3 billion KRW and 79.4 billion KRW, respectively. These figures represent a sharp increase of 28.8% and 1,749.6% compared to the same period last year. Samsung Securities analyst Oh Donghwan stated, "Fourth-quarter operating profit grew significantly from 4.3 billion KRW in the same period last year, exceeding consensus by 13.6%. This was due to a 28.8% increase in sales driven by high growth in Talk Biz and new businesses, alongside a 23.6% reduction in marketing expenses through efficiency improvements." Talk Biz sales, which include Kakao's advertising commerce, grew 73.3% in the fourth quarter, driving overall revenue and profit improvements. Analyst Oh explained, "In particular, Biz Board's daily sales have grown rapidly, surpassing 500 million KRW in December from 200 to 300 million KRW in August last year. With continuous advertiser expansion, Biz Board sales are expected to reach 220 billion KRW this year."

Due to the strong earnings, securities firms have consecutively raised their target prices for Kakao. Samsung Securities raised its target from 200,000 KRW to 240,000 KRW, a 20% increase, while Shin Young Securities adjusted theirs upward by 15.7% to 220,000 KRW. Mirae Asset Daewoo set a target of 243,000 KRW, Hanwha Investment & Securities at 210,000 KRW, SK Securities at 212,000 KRW, Shinhan Investment Corp at 210,000 KRW, Meritz Securities at 220,000 KRW, and Korea Investment & Securities at 205,000 KRW.

Jung Hoyoon, a researcher at Korea Investment & Securities, said, "New businesses that were blocked last year due to major shareholder eligibility approval and mobility law amendments will begin to achieve business model expansion and profitability improvement this year. Although many investors are waiting for a stock price correction due to last year's price increase, from a fundamental perspective, there is almost no reason for a correction."

The initial public offerings (IPOs) of subsidiaries are also expected to act as a momentum for stock price increases. Kim Changkwon, a researcher at Mirae Asset Daewoo, said, "Along with quarterly earnings improvements this year, there is IPO anticipation as a stock price momentum. Kakao Page, a webtoon service expanding its business area overseas including Indonesia, and Kakao Bank, which turned profitable last year, are scheduled for IPOs. As these subsidiaries' IPOs materialize, Kakao's valuation is expected to rise."