Shinhan Investment & Securities on the 29th said Kakao Pay's valuation has already priced in much of the market's expectations. It maintained a neutral (Hold) investment opinion. It estimated the upper end of the fair price at 75,000 won. Kakao Pay's previous closing price was 65,400 won.
Shinhan Investment & Securities judged that the structural overhang related to the exchangeable bonds (EB) issued last year by second-largest shareholder Alipay has been resolved.
Im Hee-yeon, an analyst at Shinhan Investment & Securities, said, "The exchangeable bonds have been completed through common stock exchange and redemption, and the stock lending transaction has also ended."
However, it said this should not be interpreted as the complete disappearance of overhang risk. Im added, "Alipay has been reducing its equity during uptrends, and this time its stake only changed from 31.9% to 27.1%, so it still holds a meaningful stake," and "if the stock rebounds, the possibility of additional stake sales could act as a new overhang variable."
It explained that this is a phase in which earnings are recovering and expectations for stablecoins are expanding. In an overheated section for stablecoin expectations, it estimated the upper end of the fair price at 75,000 won.
Im said, "While we agree with the activation of security token offerings (STOs) and the trend toward digital asset conversion, it is a concern that the revenue structure is limited to fees and management spreads."
In addition, it assessed that legislation, infrastructure build-out, and monetization will take considerable time, and that a higher valuation versus global peers is also a burden.
Im analyzed, "For the time being, volatility centered on narrative is expected to expand, but caution against overheating is necessary."