Shinhan Investment Corp. evaluated on the 5th that Kakao Pay is experiencing increased downward pressure due to the repeated issuance of exchangeable bonds (EB) by Alipay. It maintained a 'neutral' investment opinion and a target stock price of 51,500 won. The previous day's closing price for Kakao Pay was the same as the target price, 51,500 won.
Researcher Lim Hee-yeon of Shinhan Investment Corp. noted, "The repeated equity outflow of the second-largest shareholder is an evident risk factor during the stock price reevaluation phase," adding, "In a situation where there is no short-term stock price upward momentum, there is a supply-demand burden until the end of the year."
Previously, the second-largest shareholder Alipay announced on the 2nd that it would issue overseas EB targeting 11,445,638 shares of Kakao Pay common stock (equity ratio 8.47%).
The exchange price is 54,014 won, amounting to approximately 620 billion won. The EB issuance date is scheduled for the 2nd of next month, and the maturity date is December 29.
In relation to the EB issuance, a stock lending transaction was also conducted between Alipay, Samsung Securities, and Goldman Sachs for delta allocation hedging purposes. This follows the same lending structure as that during the EB issuance on July 17.
Researcher Lim stated, "Continuous issuance of exchangeable bonds and lending transactions could have a substantial impact on short-term supply-demand," noting that "As of the second quarter (April to June), the actual proportion of circulating stocks was only 16.2%, and the borrowed stocks completed so far account for 12.6% of the total issued shares."
He further expressed concern, saying, "The short-term stock price upward momentum has disappeared, and 77.7% of the existing circulating stocks will flow into the market by the end of the year, increasing stock supply pressure," warning that "there is exposure to an overhang (potential sell volume) risk."
Additionally, he noted, "The recently emerged governance risk could act as a variable affecting predictability during the financial-related new business expansion process, including stablecoins."