[Click eStock] "KakaoPay, Slow Profitability Improvement... Maintaining a Conservative View"

Korea Investment & Securities evaluated Kakao Pay on the 6th, stating that profitability improvement is occurring more slowly than expected, maintaining a cautious view. They kept the investment rating at 'Neutral' and did not provide a target price.

Kakao Pay's Q3 results showed revenue of 182.6 billion KRW, a 17.2% increase compared to the same period last year, and an operating loss of 7.5 billion KRW during the same period. The operating loss met market expectations of 8.1 billion KRW. Researcher Jeong Ho-yoon from Korea Investment & Securities explained, "Revenue from the payment division increased by 8.3% year-on-year, and revenue from the financial division grew by 46.0%. Key business units such as loan brokerage and insurance all showed stable growth," adding, "However, a one-time bad debt provision of 31.2 billion KRW occurred due to the TimeF incident, expanding the net loss to 27.5 billion KRW."

However, Researcher Jeong pointed out disappointment in the slowing growth rate of the payment division. He said, "It is regrettable that the payment division, which accounts for 70% of revenue, is experiencing a decline in growth rate alongside the slowdown in the e-commerce market," and added, "If the low growth in online consumption continues, it will be somewhat difficult to remain optimistic going forward."

He continued, "It does not seem easy to be optimistic about turning a profit next year either. Although there is continued top-line growth, the growth rate is declining, and profitability improvement is still occurring more slowly than expected," concluding, "We maintain a cautious view until the situation reverses."