[Click eStock] "Kakao, Trust in KakaoTalk Revamp... Target Price Maintained"

Sangsangin Securities maintained a buy rating and a target price of 46,000 KRW on Kakao on the 14th, stating, "There is more optimism about the future and growth compared to early last year due to artificial intelligence (AI) and the KakaoTalk revamp." The closing price on the previous day was 36,500 KRW.

On the same day, researcher Choi Seung-ho of Sangsangin Securities said, "Ultimately, what we can trust is the KakaoTalk revamp."

Kakao's fourth-quarter results last year are expected to show revenue of 1.9577 trillion KRW and operating profit of 113.3 billion KRW, representing a 2% decrease and a 30% increase year-on-year, respectively, falling short of the market consensus. The content segment continues to experience a steady decline. The platform segment is maintaining growth due to the high growth of the messaging business, but a rebound in display advertising (DP) is still unlikely.

Researcher Choi noted, "In content, Piccoma has dropped to second place as it lost market share in Japan to Line Webtoon," adding, "The gaming segment is declining due to a lack of new releases, and music is expected to continue negative growth year-on-year due to the introduction of Spotify’s free plan and the off-season for artist schedules."

The AI strategy is a factor of expectation. Researcher Choi said, "Kakao’s AI strategy and services will be unveiled soon," adding, "First, Kakao has announced that it will separately launch the AI app Kanana. According to media reports, Kakao is developing an AI service within KakaoTalk that can act as an assistant capable of understanding users’ situations and roles, such as summarizing conversations."

However, he also pointed out the lack of a concrete blueprint. Researcher Choi said, "Since SKT’s A. is already leading the market, it is difficult to have high expectations for the Kanana app," adding, "While they are seeking changes in commerce by launching an AI shopping mate, it will be difficult to significantly expand beyond the existing gift-giving base due to intensified domestic commerce competition." "Cost efficiency was continuously improved throughout last year, so further cost efficiency gains will be difficult at this stage," he added.