[Click e Stocks] "Kakao, Gradual Recovery Expected Rather Than Short-Term Rebound... Target Price Down"

[Asia Economy Reporter Song Hwajeong] NH Investment & Securities forecasted on the 26th that Kakao will show a gradual recovery rather than a short-term rebound due to regulatory impacts, and lowered the target stock price from 190,000 KRW to 180,000 KRW. The investment opinion was maintained as 'Buy.'

Ahn Jaemin, a researcher at NH Investment & Securities, explained, "The target price was lowered considering the downward revision of earnings estimates for some businesses and the recent decline in Kakao Bank's stock price."

The business growth trend is still considered attractive. Despite the stock price decline caused by regulations, major businesses such as advertising, commerce, webtoons, media, and Pay continue to see revenue growth, and operating profit improvement due to the turnaround of loss-making businesses is also gaining momentum. Researcher Ahn said, "Although the platform business regulations raised in September may limit the expansion of some new businesses, the current major businesses alone are expected to achieve high revenue growth and operating profit improvement, so there should be no significant issues regarding Kakao's earnings growth and corporate value increase in the mid-to-long term. Especially considering that the platform business has had a positive function in enhancing consumer convenience and expanding supply and demand, the growth of major businesses and the role of the platform will continue." He added, "However, due to the possibility of regulatory specifics and election pledges of presidential candidates, a gradual recovery rather than a short-term rebound is expected."

Kakao's third-quarter earnings this year are expected to slightly miss previous estimates. NH Investment & Securities estimated Kakao's third-quarter revenue at 1.7 trillion KRW, a 54.2% increase year-on-year, and operating profit at 229.4 billion KRW, a 90.0% increase. The operating profit is slightly below the previous estimate of 259.9 billion KRW. Researcher Ahn analyzed, "The success of Kakao Games' 'Odin' will drive earnings growth through revenue growth and operating profit improvement in the gaming business. Despite the third quarter being a low season for the cash cow advertising business, the growth of Kakao Biz Board and Talk Channel remains prominent, and the commerce business, which was merged back into Kakao, is expected to continue its growth by creating synergy with advertising."

This content was produced with the assistance of AI translation services.