Kakao Group’s value near LG, Hyundai
When Kakao was established 10 years ago, few expected that it would be one of the largest conglomerates in South Korea. Now few appear to suspect its upside potential.
After mobile payment service Kakao Pay made a successful debut this week on the Seoul bourse, its market capitalization once topped $21 billion on Day 1.
As of Nov. 3, Kakao Group’s overall market capitalization stood at $98.2 billion, including four other units like Kakao, Kakao Games, and internet-only lender Kakao Bank.
The value is comparable to LG Group and Hyundai Group whose market capitalization was around $110 billion, respectively, according to the Korea Exchange.
In addition, Kakao is defeating its nemesis Naver whose value is around half of Kakao.
Kakao’s advantage is its instant messaging services, which are used by almost all South Korean people.
Kakao Pay spun off from Kakao in 2017 to become a foremost mobile payment service provider with a monthly active user of more than 20 million people.
However, there are concerns that the company’s share price is too high as it netted a loss of $15 million last year. It managed to turn a profit during the first half of 2021, though.
Some observers suspect whether the high price is sustainable.
eBest Investment & Securities expects $104, and Meritz Securities comes up with $93. KTB Investment & Securities even notes that the proper value is $48.
“Investors seem to respect Kakao Pay’s upside potential. Plus, the low supply of shares supports its high share price,” KTB Investment & Securities analyst Kim Jin-gu said.
“It remains to be seen how the share price will move after major shareholders are allowed to trade their stocks.”
Many institutional investors are prohibited from trading their stocks of Kakao Pay for a month after its listing.