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THE INVESTOR
July 16, 2020
Big Reunion

Stocks & Bonds

[EQUITIES] ‘Kakao to see leap in profits from advertising’

  • PUBLISHED :February 15, 2019 - 14:24
  • UPDATED :February 15, 2019 - 14:24
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Kakao will advance in several sectors, including advertising, said KB Investment and Securities on Feb. 15, maintaining a “buy” recommendation and raising the target price to 138,000 won (US$122.43) from 135,000 won.



The company’s revenue in the fourth quarter surpassed market expectations, reaching 673.1 billion won, but operating profit was approximately 85 percent lower than forecast at 4.3 billion won, said analyst Lee Dong-ryun, who attributed the disappointing results to a 65 billion won operating loss incurred by Kakao’s new businesses, including its mobility and payment businesses.

However, revenue from ads, content and other sectors respectively increased 13.9 percent, 18.2 percent and 48.4 percent. And this year, Kakao’s key business area -- advertising -- will lift the bottom line of the whole company, forecast the analyst. Losses from new businesses will diminish as those businesses begin to generate profits and the firm controls costs, he said.

Revenue from ads will take a sharp upturn beginning in the second quarter, when artificial intelligence-based ad products are set to be unveiled, while core affiliates such as the commerce, mobility and payment affiliates will continue to grow, said Lee.

By Hwang You-mee (glamazon@heraldcorp.com)

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