Shinhan Investment & Securities said on the 14th that while earnings at Kakao continue to improve, the pace of its artificial intelligence (AI) business is disappointing. It maintained its "buy (BUY)" rating but lowered the target price to 75,000 won from 80,000 won. Kakao's closing price in the previous session was 47,000 won.
Shinhan Investment & Securities expects Kakao's operating revenue in the first quarter of this year to reach 1.9826 trillion won and operating profit to reach 178.5 billion won. Those figures are up 6.4% and 69.4%, respectively, from a year earlier. The numbers are in line with the market consensus for operating profit of 181.5 billion won.
Kang Seok-oh, an analyst at Shinhan Investment & Securities, said, "Based on new features introduced in Kakao Talk, high growth centered on the Talk Biz institutional sector is expected," and added, "The mobility business has also shown double-digit top-line growth and improved profitability since last year, and, along with Kakao Pay, its contribution to profit is expanding."
However, the uncertainty over when the AI business will generate revenue was cited as a burden. Kang said, "In the market for work agents such as Codex and Claude Code, monetization is already underway, but the B2C area closely tied to everyday life is still in its early stages," and added, "We lowered the target price to reflect the possibility that commercialization and revenue generation could be delayed."
Over the long term, AI agents are expected to serve as a key driver for a rise in the share price. Kang added, "If Kakao Talk integrates AI into various services such as food delivery, restaurant reservations and travel, and connects it naturally through to payment, the company has a strong chance to secure first-mover advantage in the domestic market," and "If collaboration expands with major vertical players such as Musinsa, Olive Young and The Hyundai, the momentum for a rebound in the share price will grow."