[Click e-Stock] "Kakao Pay Delivers Mixed Results"

On August 6, Korea Investment & Securities stated that while Kakao Pay is expected to escape losses and achieve profit growth starting in 2025, driven by the rapid expansion of its financial services division, its valuation?measured by the price-to-sales ratio (PSR)?remains a concern as it exceeds the average PSR of global fintech companies. The investment opinion was maintained as 'Neutral.'

In the second quarter, Kakao Pay recorded revenue of 238.3 billion KRW (+28.5% year-on-year) and operating profit of 9.3 billion KRW (returning to profit), both exceeding market expectations (operating profit of 7 billion KRW). The payment division posted revenue of 125.1 billion KRW (+3.0%), while the financial services division achieved revenue of 100.3 billion KRW (+81.8%), both showing strong growth this quarter. Although the lending service grew only 3% due to regulatory impacts, the investment service and insurance service grew by 148% and 88%, respectively, driving the expansion of the financial services division.

Jung Hoyoon, a researcher at Korea Investment & Securities, commented, "The results showed both strengths and weaknesses. The payment division's growth rate remained low at 3%, and the lending service within financial services also posted a modest 3% growth. However, the growth of Kakao Pay Securities is remarkable." In fact, the quarterly stock trading volume reached 23.5 trillion KRW (+101%), a significant increase compared to the previous year.

Jung also noted, "Although some investment banking-related revenue was reflected in the second quarter, fee income is structurally increasing due to the expansion of stock trading volume. While high growth in investment and insurance services is expected to continue driving operating profit growth through 2026, we remain cautious regarding whether profit generation can be sufficient to justify the valuation, given the low growth in core business divisions."