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Photo = Yonhap news |
[Alpha Biz= Reporter Kim Sangjin] Shinhan Investment Corp. has maintained its "Buy" rating on Kakao Pay, raising its target price from 31,000 KRW to 34,000 KRW, citing clear signs of improved performance in 2024.
In its company analysis report on December 3, Shinhan highlighted that the increase in overseas stock trading volumes and recovery in the real estate project fund (PF) market are expected to reduce losses for Kakao Pay Securities. It also projected a possible turnaround to consolidated operating profit as early as next year, with 2025 likely marking the first full year of Kakao Pay’s financial rebound.
The firm anticipates consistent profit growth in Kakao Pay’s core payment and financial services businesses. Revenue for 2024 is forecasted at 673.6 billion KRW, up 8.9% year-on-year, while operating profit is expected to rise 36.6% to 57.6 billion KRW.
Despite the lingering effects of the "Temeph" incident, Shinhan noted that Kakao Pay’s operating margin will continue to improve due to economies of scale, even though overall growth may slow.
Regarding Kakao Pay Securities, the firm estimated that, under assumptions of a 5% market share in overseas stock trading, a fee rate of 10 basis points (bps), and a fee-to-cost ratio of 20%, quarterly fee income could reach 2.4 billion KRW per 1 trillion KRW of average daily trading volume. Operating losses for Kakao Pay Securities are expected to decrease to 8.3 billion KRW in 2024, a significant improvement from this year’s projected loss of approximately 20 billion KRW.
However, Kakao Pay Insurance is likely to remain unprofitable for now. Shinhan assessed that while losses are expected to persist in the short term, the normalization process is progressing steadily, minimizing long-term concerns.
Alphabiz Reporter Kim SangJin(letyou@alphabiz.co.kr)
