[Click eStock] "Kakao, Q1 Earnings Growth Despite COVID-19"

Daishin Securities Issues 'Buy' Investment Opinion and Sets Target Price at 220,000 KRW... Closing Price on 3rd at 157,500 KRW

[Asia Economy Reporter Geum Bo-ryeong] Despite the spread of the novel coronavirus infection (COVID-19), Kakao's performance in the first quarter of this year is expected to show growth.

According to Daishin Securities on the 6th, Kakao's first-quarter sales are estimated at 849.1 billion KRW, and operating profit at 68.3 billion KRW. Compared to the previous year, these figures represent increases of 20% and 147%, respectively.

Lee Min-ah, a researcher at Daishin Securities, said, "Advertising revenue within Talk Biz (KakaoTalk Channel, Shop Tab, Talk Store, and Talk Board) is expected to be lower than previously estimated. This is likely due to the off-season and the impact of COVID-19," but added, "Thanks to the favorable e-commerce market, sales from KakaoTalk Gift and Makers are expected to be strong. Although the estimates have been lowered compared to before, due to the low base effect from last year, the growth rate of the Talk Biz segment is still expected to reach 69%."

The surge in KakaoTalk usage time is notable. It has been identified that the duration of use has significantly increased since the outbreak of COVID-19. The researcher explained, "This is expected to lead to increased advertising revenue in commerce areas such as Talk Store, Gift, Makers, and in the long term, channels like Channel and Shop Tab."

Portal Biz sales are expected to decrease by 6% compared to the same period last year due to the impact of COVID-19. Mobility sales, which are expected to be the most affected, are forecasted to drop by 29% compared to the previous quarter.

The researcher said, "KakaoPay sales are expected to remain solid," adding, "The upgrade of securities accounts has already surpassed 500,000 accounts and is progressing smoothly."

Daishin Securities gave Kakao a 'Buy' investment rating with a target price of 220,000 KRW. The closing price on the 3rd was 157,500 KRW.