[Click eStock] "KakaoPay with Continued Deficits, Key is Performance Visibility... Target Price Maintained"

[Asia Economy Reporter Myunghwan Lee] Samsung Securities announced on the 3rd that it maintains a buy rating and a target price of 82,000 KRW for KakaoPay. It also pointed out that in order to recover valuation in the future, the expansion performance as a financial platform must become evident.

KakaoPay's sales in the second quarter of this year recorded 134.1 billion KRW, an increase of 22.8% compared to the same period last year. By segment, payment services posted sales of 93.8 billion KRW, up 35.7% from the same period last year. This was explained as continuing high growth by securing key online and offline merchants. KakaoPay's number of merchants increased by 31.3% year-on-year to 1.66 million. Financial services sales recorded 33.4 billion KRW, down 1.1% during the same period. The decline was significantly recovered as the loan brokerage transaction volume (TPV) increased by 14% year-on-year due to the activation of loan comparison services and expansion of loan product lineups. Previously, in the first quarter, KakaoPay's financial services sales decreased by 32.5% compared to last year.

However, the operating loss in the second quarter was 12.5 billion KRW, continuing the deficit. This was attributed to a 22.6% increase in advertising and promotional expenses due to the launch of KakaoPay Securities' Mobile Trading System (MTS) and payment promotions, as well as expanded investments in subsidiaries such as securities and insurance. Samsung Securities expects operating expenses to show a high short-term increase during the business expansion process. However, it forecasted that stability will be found once a series of investments are completed.

The monthly active users (MAU) in the second quarter recorded 21.95 million, an increase of 10.1% compared to the same period last year. Samsung Securities viewed that the speed of traffic increase through diversification of financial services such as new MTS services and expansion of loan brokerage lineups will be a key factor in the future. Researcher Jo Ahae of Samsung Securities said, "Considering the active expansion as a B2C (business-to-consumer) financial platform from a mid- to long-term perspective, we maintain a positive view," and analyzed, "The main key to valuation recovery in the future is the visualization of expansion performance."