(Photo= Yonhap news)

 

[Alpha Biz= Reporter Kim Sangjin] Daishin Securities has analyzed that Kakao's content subsidiary continues to show weak performance. They expect that the second-quarter results this year will fall below market expectations due to the subsidiary's underperformance and increased marketing expenses. Despite this, they maintain a 'buy' rating but have lowered the target price from the previous 68,000 Korean won to 60,000 Korean won.

Daishin Securities stated, "The intrinsic value of Kakao's core business is calculated at 7.9 trillion Korean won, with stakes in key subsidiaries such as Kakao Games, Kakao Bank, and Kakao Pay valued at 18.6 trillion Korean won." They explained the downward adjustment of the target price was influenced by slower domestic advertising market recovery compared to global trends, applying a 30% discount relative to global peers and resulting in a 27% reduction in business valuation compared to previous estimates.

For the second quarter of this year, Daishin Securities forecasts Kakao's revenue to be 2.384 trillion Korean won (+6.0% year-on-year, +2.5% quarter-on-quarter) and operating profit to be 1.354 trillion Korean won (+19.7% year-on-year, +12.5% quarter-on-quarter). An analyst at the firm noted, "Operating profit is expected to fall short of market expectations due to weak performance in the gaming and music sectors, along with increased marketing expenses."

Regarding Kakao's TalkBiz segment, they anticipate sales of 519.2 billion Korean won (+8.1% quarter-on-quarter). The analyst mentioned, "Message advertising is expected to grow by over 10% following the first quarter, but overall advertising growth rate compared to the same period last year is expected to decline due to the disappearance of the low base effect from the significant downturn in advertising performance in the first quarter of last year."

 

 

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