Junior Members of the 'Kakao Empire'... 9 Companies Valued Over 1 Trillion Won Each

[Asia Economy Reporter Boo Aeri] The growth of Kakao's junior companies is remarkable. Over the past decade, Kakao has actively pursued a strategy of spinning off promising business divisions into subsidiaries. This subsidiary-centered growth strategy enables swift decision-making and strengthens expertise in each business sector. Kakao's strategy is now bearing fruit. By leveraging its subsidiaries to expand, Kakao has transformed into the 'Kakao Empire,' boasting 10,000 group employees and 101 affiliates.

Nine Subsidiaries Valued Over 1 Trillion KRW

According to Kakao on the 19th, there are nine Kakao subsidiaries with a corporate value exceeding 1 trillion KRW. Kakao Games, which was the first Kakao affiliate to go public last year, has a market capitalization of 3.3649 trillion KRW. Kakao Bank, preparing for its IPO this year, has surpassed a valuation of 9 trillion KRW. Kakao Bank turned profitable within two years of its launch, and with the spread of COVID-19 increasing demand for contactless services, its valuation continues to rise. Kakao Pay, another Kakao financial business, has also performed well in the simple payment and certification markets, earning a corporate value between 9 and 10 trillion KRW.

Subsidiaries in new business sectors are also standing out. Kakao Mobility, which had recorded losses annually, is expected to turn profitable this year as its franchise taxi service 'Kakao T Blue' surpassed 13,000 vehicles. Reflecting this growth, securities firms have valued Kakao Mobility at 7 trillion KRW. Kakao Enterprise and Kakao M have emerged as 'rising powers' among Kakao affiliates. Kakao Enterprise, responsible for AI-based B2B (business-to-business) operations, recently secured a 100 billion KRW investment from KDB Industrial Bank, estimating its valuation at 1 trillion KRW. Kakao Enterprise launched the corporate collaboration tool 'Kakao Work' and is set to enter the cloud market this year with 'Kakao i Cloud.' Kakao M, which offers dramas and entertainment through Kakao TV, has surpassed a corporate value of 1.7 trillion KRW.

With webtoons reaching their heyday, Kakao Page is also evaluated as a company with significant growth potential. Kakao Page's corporate value is estimated between 4 and 5 trillion KRW. Mirae Asset Daewoo analyzed the combined value of Kakao Page and Kakao Japan, which operates the Japanese webtoon platform 'Piccoma,' at 10 trillion KRW. Kakao Commerce, which manages e-commerce sectors such as gifting and shopping within KakaoTalk, is also experiencing rapid growth due to the impact of contactless shopping. Recently, through the split and merger of Kakao IX, it absorbed the retail business of Kakao Friends intellectual property (IP). Securities firms estimate Kakao Commerce's corporate value at around 2 trillion KRW.

Beom-su Kim, Chairman of the Kakao Board of Directors

Opening the Era of 4 Trillion KRW in Sales?

Fueled by the growth of its subsidiaries, Kakao is expected to post record-breaking results for the fourth quarter of last year. Securities firms forecast Kakao's Q4 sales at 1.168 trillion KRW and operating profit at 141.7 billion KRW. These figures represent growth of 6.1% and 17.9%, respectively, compared to the third quarter's sales and operating profit, which were the highest in Kakao's history. Given this trend, there are predictions that Kakao will enter the era of 4 trillion KRW in annual sales.

Experts foresee that Kakao Empire's affiliates will build a virtuous cycle structure, further expanding their scalability in the future. Kakao's strategy, which posits that achieving a certain market share will naturally lead to profits, has proven effective. Kakao Page, which pioneered the concept of monetizing webtoons, and Kakao Mobility, which led changes in the taxi industry, are prime examples. Despite enduring long-term losses, these two businesses have become Kakao's new growth engines, supported by Chairman Kim Beom-su's backing. Professor Wi Jeong-hyun of Chung-Ang University's Department of Business Administration commented, "Kakao has already established an internal foundation where each business can create synergy with one another. This means it has become easier to enter new businesses in the future."