"Kakao Target Price Cut Reflecting Uncertainty Over Spin-Off" [Click e-Stock]

On September 22, IBK Investment & Securities lowered its target price for Kakao from 73,000 won to 53,000 won, reflecting early-stage uncertainty surrounding the planned spin-off and restructuring of the company and its subsidiaries. The brokerage maintained its "Buy" rating.

Lee Seunghoon, an analyst at IBK Investment & Securities, stated in a report released the same day, "Kakao has decided to proceed with a spin-off, creating two entities: Kakao AI (the new company) and Kakao X (the surviving company). Based on book value of net assets, the split ratio is Kakao AI 0.36 and Kakao X 0.64, so existing shareholders will be allocated shares in both companies without equity dilution or any financial burden."

Kakao AI will be repositioned as an "AI Core Company" responsible for key platform businesses including KakaoTalk, AI, advertising, and commerce. The surviving entity, Kakao X, will act as a future value investment company, taking charge of managing subsidiaries in tech-fin, content, and mobility, as well as investing in innovative new businesses. By 2030, the target revenues are 6 trillion won for Kakao AI and over 10 trillion won for Kakao X's main businesses.

Analyst Lee commented, "Kakao's complex and inefficient business structure has overshadowed the intrinsic value of its KakaoTalk and AI businesses," and added, "If Kakao X establishes a system for quick decision-making by consolidating, selling, or downsizing non-core subsidiaries, it will be able to break free from the burden of supporting its subsidiaries, significantly enhancing capital allocation efficiency." He further explained, "As social responsibility tied to KakaoTalk will be confined to Kakao AI, Kakao X will be able to aggressively pursue new business opportunities, maximizing strategic flexibility across the entire group."

"Initially, the spin-off will increase uncertainty, and it will take time for investor sentiment to recover," Lee noted. "The future direction of the stock price will largely depend on how flawlessly the established plan is executed," he added.

This content was produced with the assistance of AI translation services.