[Edaily Reporter Shin Ha-yeon ] On the 7th, Meritz Securities assessed that Kakao(035720)has entered a phase of normalized consolidated earnings following the divestment of loss-making business units and maintained its “Buy” investment rating. However, it lowered the target price by 30.7% from the previous 75,000 won to 52,000 won.

Lee Hyo-jin, an analyst at Meritz Securities, stated, “Through the divestment of stakes in various unprofitable businesses, Kakao’s consolidated earnings are now clean,” adding, “Given the company’s strategic direction and the divestment of unprofitable business units, it is now possible to apply a normal valuation comparable to that of its peers.”

Kakao’s second-quarter consolidated revenue stood at 2.0985 trillion won, a 2.1% decrease year-over-year, but operating profit rose 69.0% to 277 billion won, exceeding Meritz Securities’ estimate by approximately 20 billion won. Analysts attribute the improved profitability to kakaopay’s operating profit showing a significant improvement beyond expectations, coupled with the exclusion of the previously unprofitable healthcare and Kakao Games Corp. divisions from consolidated results, as well as the exclusion of the portal business starting this quarter.

The TalkBiz division also continued its growth momentum. The analyst explained, “Business messaging recorded 20% year-over-year (YoY) growth and is currently TalkBiz’s strongest growth driver,” adding, “TalkDA grew 28% YoY as feed-type ads, which have a high unit price, were recognized as revenue.” However, the analyst noted, “No separate profit surge occurred due to factors such as rising labor costs.”

The assessment is that securing new growth drivers is necessary for a future revaluation of the company’s enterprise value. The analyst projected, “Simply eliminating current loss-making business units and restructuring the business is insufficient to justify a premium,” adding, “Contrary to expectations, if Agent-based Commerce emerges as a new revenue source capable of transforming the company’s profit resilience, market expectations could rise again.”

He continued, “While the company’s challenges are worth watching, neither Kakao’s current situation nor the market ecosystem seems to provide a solid basis for painting a rosy future,” and emphasized, “If, contrary to expectations, Agent-based Commerce emerges as a new revenue source capable of transforming the company’s profit capacity, market sentiment could rise again.”